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Risk implies that actual outcomes may vary, sometimes significantly, from desired outcomes. Both the probability of this variance and the degree of variance between actual and desired outcomes is encapsulated in the term "risk." When you manage risk, you strategically minimize the variance between the outcome that you want and the actual outcome.
The ability to identify, classify, analyze, and manage risks is an organizational capability that is required to achieve a Standard CMMI Appraisal Method for Process Improvement (SCAMPI) appraisal at level 3. For more information about CMMI, see Background to CMMI.
By managing these event-driven risks, a significant contribution is made to the overall goal of managing risk at the project, portfolio, and organizational levels. Good event-driven risk management contributes to an outcome that is satisfactory to all stakeholders and that deviates little from the initially desired outcome. It contributes to an expectation of "no surprises!"
Thinking of risks in this manner is sometimes referred to as the event-driven risk model. This implies that a list of risks is a list of potential future events. Each risk describes some event that may occur in the future. It may include some information about the probability of occurrence. It should include a description of the impact that such an occurrence would have on the project plan. It may also include a description of ways to reduce the probability of occurrence and ways to mitigate the impact of occurrence. It may also include suggested forms of recovery after an occurrence.
For each risk that is identified, create a risk work item in the team project.
The risk work item
The Risk Management (RSKM) process area in the CMMI focuses on the management of these event-related risks. MSF for CMMI Process Improvement and Visual Studio Team Foundation Server make this easier by providing the risk work item type. By using the risk work item type, you can define and track a list of risks. It provides fields to describe the risk, the probability of occurrence. It also provides fields for actions that can be taken to reduce the probability of occurrence, mitigate the impact, and implement contingency plans for recovery in the event of an occurrence.
The initial project risks should be identified during project planning. The risk list should be revisited during iteration planning at the start of each project iteration.
The work item form for a risk stores data in the fields that the following illustration shows:
Select actions to be taken
After you create a list of risks and they have been sufficiently analyzed, it is time to decide what, if any, actions will be taken to manage these risks. Are there any actions that will reduce the probability of occurrence that you want to take now or describe in an iteration plan? Are there any actions that would mitigate the impact of occurrence that you want to take now or describe in an iteration plan? Taking actions to reduce or mitigate risks costs time and resources. This must be traded against using those resources and the available time to move the project work forward and turn the scope into working software. Document the risk reduction and mitigation actions that you plan on the Mitigation tab of the risk.
The overall risk profile for the project must be considered when you decide when to take action to reduce the probability or mitigate the impact of risks. If the risk profile says "any loss of life is unacceptable," any risk that might cause a loss of life must be managed, and reduction and mitigation actions must be planned and taken.
You should ensure that risks are managed in line with project governance constraints and in an appropriate balance with the need to achieve delivery of all value-added work within the available time and budget.
If a risk is selected for reduction of probability or mitigation of its impact, plan this activity by breaking it into task work items and link each to a risk work item.
Project risks should be monitored regularly.
Use the risks query to monitor risks. Scan each active risk on the list, and consider whether the probability of occurrence has increased, whether the potential impact has changed, and whether any mitigation trigger events have occurred. If there is any material change in the information that is captured for a risk, update the work item. Also, consider whether further action needs to be taken to reduce the risk or to mitigate its impact.
The current risk status of the project should be communicated. Reports should include information about any risks that were recently uncovered, any reduction or mitigation actions that are in progress, and any change in status that would cause a change in the earlier assessment of the risk.
Make contingency plans
For risks where a recovery action was defined, a plan should be made to implement the contingency if the event of occurs. For example, if there is a risk that a server might fail and the contingency is to borrow hardware from another department, you should have a plan to enact this if the server fails. Making plans in advance reduces the coordination challenge if the event occurs. A higher maturity organization with a greater capability for risk management makes contingency plans and knows how to enact them without significant impact to other project activities. Lower maturity organizations suffer panic and chaos while trying to recover from unexpected events. An organization that seeks a SCAMPI appraisal at level 3 should have documented evidence to show that contingency plans were made and, when appropriate, followed.
Break out the contingency plan into a series of tasks or actions to be taken. Estimate each task. Create a schedule and a recommended list of assigned personnel. Describe all the resources that will be required to execute the contingency plan.
Add the contingency plan to the risk work item on the Contingency Plan tab, or add the plan as an attachment.