Risk Management

Traditional and Agile methodologies have different approaches to Risk Management:


Traditional risk management (defined in the PMBoK, Prince II, CMMI and other frameworks) takes an event driven approach to risk. It seeks to model external variations that affect schedule, budget and scope on projects.

The model is simple:

  1. try to build a list of external events that might occur
  2. assess the impact and likelihood of occurrence
  3. assess the cost of mitigation options
  4. decide whether to mitigate (reduce chance of occurrence) or create a contingency plan (to recover in the event of occurrence.)

This model is created at the beginning of the project, next to the requirements document. Traditional (non-agile) project scheduling techniques treat all tasks homogeneously from a risk management perspective.


The application of Lean pull systems (kanban) and Real Options Theory in agile methods is providing new sophisticated means to manage overall business risk in technology projects and software delivery.

In every iteration, we can classify user stories heterogeneously according to:

  • cost of delay (or failure): depending on the loss incurred due to late delivery, we can assign different colored sticky notes, or index cards allowing team members to quickly assess risk and pull the most important item through the system in a self-organizing manner.
  • market risk: classified as commodity (or table stakes), differentiator, spoiler, and cost saver. Each category exhibit different risk of change (deletion from scope, or change in definition) due to market conditions during the lifetime of the project. This scheme mitigates the risk of rework (or waste) caused by changes in scope associated with changing market and business conditions.

Summing-up: Agile schemes provide methods that enable simple, fast, and often self-organizing approaches to maximize business value and manage risk throughout the project lifecycle.

These notes have been taken from:

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  1. Yaugel

    My opinion is that it does matetr, but there is also a delicate balance to maintain. When working with remote teams, we try to make sure that there are full feature teams at the location and well-defined and frequent (at least daily) touch points back to headquarters and we always work to get those teams co-located in the same space.The trade-off is between team and personal productivity. I do think that most individuals are for periods of time more productive when they have privacy and seclusion, but that it always comes at the expense of the larger group being part of what they are doing. Taken to its extreme, it leads to documentation replacing human interaction – something we all know is counter to what we are trying to accomplish. I also think that seclusion leads to distraction – co-location tends to help keep everyone on the team focused on what the team needs now. Your teammates help keep you from following tangents that are unrelated to the current work in progress.

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