1. Chapter 28
Risk Analysis
Coming up: Project Risks

2. What is risk? You have some expected outcome
Of some event in the future
Risk is the deviation of the actual future outcome from the expected outcome
Other definitions:
Hazard: something negative that can happen in the future
Risk is the probability of the hazard

3. Why analyze risk What is the expected outcome?
Let’s say you know the risk of permanent injury/death of a <insert you own “very fun activity” here> is 1/1000 instances.
Would you perform the activity? Why? Why not?
This activity was “optional”. What about:
Let’s say you have a disease and there is a treatment that works 25% of the time, does nothing 50% of the time, and results in immediate death 25% of the time
Would you perform this activity? Why? Why not?
The consequence of not performing this activity is death within five years. You must do it now, you can’t do it five years from now.

4. Why do we care about risk analysis?
What does knowing the risk of some hazard buy you?
We know we can only care about future activities
We know (or hope) that our risk analysis provides some actionable outcomes
What are we really trying to decide?
How would the following statement be useful:
The estimated damage by hazard X would be 2 million dollars
The risk of hazard X is 1%

5. What risks exist in software?
Project risks
Schedule slips
Cost increases
Technical risks
The problem is harder to solve than you thought it would be
Threaten quality and timeliness
Business risks
Market risk, strategic risk, sales risk, management risk, budget risks

6. Consequences of Project Risks
Schedule slips and costs increase:
Budgetary risks
Schedule risks
Personnel risks
Resource risks
Stakeholder risks
Requirements problems
What is the worst possible outcome in this case?
When looking for these risks, what are we trying to avoid?

7. Consequences of Technical Risks
Reduces quality and timeliness
Design, implementation, interface, verification, and maintenance problems
Specification ambiguity, technical uncertainty, technical obsolescence, “leading-edge” technology
The problem is harder to solve than you thought it would be
What is the worst possible outcome with these risks?
What are we trying to avoid?

8. Other risks
Mentioned business risks: threaten the viability of the software to be built
Risks can also be classified into the following categories:
Known risks – after a careful analysis
Predictable risks – extrapolated from past project experiences
Unpredictable risks – extremely difficult to identify in advance

9. Project Risks What can go wrong? What is the likelihood?
What will the damage be?
What can we do about it?
Coming up: Option 1: Deal with the problem when it occurs

10. What is the point of identifying risks?
Avoid them when possible
Control them when necessary
Again, we perform risk analysis in order to create actionable items
not simply to “be aware” of the risk of something, without changing what we will do as a response

11. What treatments can we apply to risk (in general)?
Do nothing
i.e. if you don’t try, you can never fail
Risk sharing
Risk retention
Risk reduction

12. Option 1: Deal with the problem when it occurs
Caller: I have a slight problem, I’m trapped in my burning house
911: Fire truck on it’s way
What kinds
of risks could
you handle
like this?
Coming up: Option 2: Contingency plan: Plan ahead what you will do when the risk occurs

13. Option 2: Contingency plan: Plan ahead what you will do when the risk occurs
Coming up: Option 3: Risk mitigation: Lessen the probability of the risk occuring. Reduce the impact of occurence

14. Option 3: Risk mitigation: Lessen the probability of the risk occurring. Reduce the impact of occurrence
Lets read about not playing with fire
Reduce probability
Reduce impact
Coming up: Risk Management Paradigm

15. What is a risk with 100% probability?
A constraint

16. Risk Management Paradigm
control
track
RISK
identify
plan
analyze
Coming up: How to identify risks

17. Step 1: identification Generic risks Product-specific risks
Potential threat to every software project
Product-specific risks
What special characteristics of this project may threaten the project plan?

18. Checklist of generic risks
Product size
Business impact: mgmt or market
Stakeholder characteristics: sophistication, communication
Process definition
Development environment
Technology complexity and newness
Staff size and experience

19. How to identify risks
Common risks - many risks are common to many projects. Start with a list of these. (Your book has a list, and the web has many)
Some examples:
Schedule is optimistic, "best case," rather than realistic, "expected case”.
Layoffs and cutbacks reduce team’s capacity
Development tools are not in place by the desired time
End user ultimately finds product to be unsatisfactory, requiring redesign and rework.
Customer insists on new requirements.
Vaguely specified areas of the product are more time-consuming than expected.
Personnel need extra time to learn unfamiliar software tools or environment

20. Step 2: risk analysis
Want to figure out the impact of the potential risk and the likelihood that it will occur
Why? What do you think the next step is?
Prioritization that leads to allocating resources where they will have the most impact

21. Risk Projection
Risk projection, also called risk estimation, attempts to rate each risk in two ways
the likelihood or probability that the risk will occur
the consequences of the problems associated with the risk, should it occur.
The are four risk projection steps:
establish a scale that reflects the perceived likelihood of a risk occuring (high, medium, low or numeric)
delineate the consequences of the risk
estimate the impact of the risk on the project and the product if it occurs
note the overall accuracy of the risk projection so that there will be no misunderstandings.
These slides are designed to accompany Software Engineering: A Practitioner’s Approach, 7/e (McGraw-Hill 2009). Slides copyright 2009 by Roger Pressman.

22. Building a Risk Table Coming up in a few slides… Risk Probability
Impact
Exposure
RMMM
Text description of the risk
Risk
Mitigation
Monitoring
&
Management
Probability of occurrence
Impact if occurs (Negligible=1…Catastrophic=5)
Coming up in a few slides…
These slides are designed to accompany Software Engineering: A Practitioner’s Approach, 7/e (McGraw-Hill 2009). Slides copyright 2009 by Roger Pressman.

23. Building the Risk Table
Estimate the probability of occurrence
Estimate the impact on the project on a scale of 1 to 5, where
1 = low impact on project success
5 = catastrophic impact on project success
Determine the exposure:
Risk Exposure = Probability x Impact
Some use cost to the project rather than impact, but in my experience cost is hard to estimate accurately. - Fleck
Got Here April 20, 2010
These slides are designed to accompany Software Engineering: A Practitioner’s Approach, 7/e (McGraw-Hill 2009). Slides copyright 2009 by Roger Pressman.

24. What is the point of the risk table?
To sort the risks by exposure
You may decide to study the resultant table and come up with a cutoff line
What do you do with a risk that has a high impact but a very low probability?
What about risks with high impact and high to moderate probability

25. How do you assess risk impact?
Three factors affect the consequences of a risk occurring:
Nature (technical, business, project)
Scope (combines severity with its overall distribution)
Timing (how long will the impact be felt) – do you want to know early or know late?
Impact is then used to assess overall risk exposure:
RiskExposure = Probability x Impact

26. Risk Exposure Example
Risk identification. Only 70 percent of the software components scheduled for reuse will, in fact, be integrated into the application. The remaining functionality will have to be custom developed.
Risk probability. 80% (likely).
Risk impact. 60 reusable software components were planned. If only 70 percent can be used, 18 components would have to be developed from scratch (in addition to other custom software that has been scheduled for development). Since the average component is 100 LOC and local data indicate that the software engineering cost for each LOC is $14.00, the overall cost (impact) to develop the components would be 18 x 100 x 14 = $25,200.
Risk exposure. RE = 0.80 x 25,200 ~ $20,200.
Numbers here seem “solid”, but are all guesses. Putting dollar values to it makes it seem like an extra $20K will solve the problem, but that’s truly uncertain. I prefer relative scoring and thinking.
These slides are designed to accompany Software Engineering: A Practitioner’s Approach, 7/e (McGraw-Hill 2009). Slides copyright 2009 by Roger Pressman.

27. Ways to view risk Financial loss
Implies that adding more to the budget mitigates these risks
Arbitrary, numerical ratings assigned to impact
Which one is better? Why?

28. Step 3: risk planning
Our goal is to develop strategies to deal with risk
Three issues:
Risk avoidance
Risk monitoring
Risk management

29. Risk Mitigation, Monitoring, and Management
mitigation—how can we avoid the risk?
monitoring—what factors can we track that will enable us to determine if the risk is becoming more or less likely?
management—what contingency plans do we have if the risk becomes a reality?
These slides are designed to accompany Software Engineering: A Practitioner’s Approach, 7/e (McGraw-Hill 2009). Slides copyright 2009 by Roger Pressman.

30. Risk Management Paradigm
control
identify
analyze
plan
track
Key step:
Once you have created your risk spreadsheet… you must track and update it as things change.
These slides are designed to accompany Software Engineering: A Practitioner’s Approach, 7/e (McGraw-Hill 2009). Slides copyright 2009 by Roger Pressman.

31. Risk Impact revisited
So far what sorts of worst case scenarios have we talked about?
The project doesn’t get delivered on time/budget
The project never happens
We don’t get re-hired
But it could be much worse
There are software applications where lives are directly at stake
So-called dependable or ultra-dependable systems

32. Risks as hazards
A hazard is a system (or project) state we want to avoid
A hazard has an associated probability
This is in contrast to the hazard actually occurring, which we can call an accident (John Knight)
Example hazard: a failed ABS system
Example accident: the car crashes due to the failed ABS system

33. Hazard analysis through fault trees
See John Knight’s slides:
Slides 16-24

34. Risk Impact revisited
So far what sorts of worst case scenarios have we talked about?
The project doesn’t get delivered on time/budget
The project never happens
We don’t get re-hired
Other risks related to software security or privacy
Unauthorized access to information
May directly or indirectly result in monetary losses

35. Risk Impact revisited
From Verdon et al:

36. Risk Analysis and requirements
SecureUML: role-based access control and models security requirements for well-behaved applications in predictable environments
UMLsec: modeling confidentiality and access control
Federal and state laws (HIPAA, etc)
Make conformance with laws into must-have requirements
From Verdon et al:

37. Risk Analysis Example: research
Assume you are writing a piece of software that uses a bunch of commercial-off-the-shelf components (COTS) or is made up of many modules.
How do you know risk associated with using any given component?
Risk = probability x cost
Probability is the probability of a fault in the component
Cost is the impact of the fault (measured by software fault injection)
From Moraes et al in “Experimental Risk Assessment and Comparison Using Software Fault Injection”, 2007.

38. How do we measure the cost of an injected fault?
What happens after a single fault is injected:
System hang
System crash
System wrong
System correct
From Moraes et al in “Experimental Risk Assessment and Comparison Using Software Fault Injection”, 2007.

39. Example COTS
From Moraes et al in “Experimental Risk Assessment and Comparison Using Software Fault Injection”, 2007.

40. Example COTS
From Moraes et al in “Experimental Risk Assessment and Comparison Using Software Fault Injection”, 2007.

41. Reminder Team Presentations next week: Should be 10-20 minutes
These slides are designed to accompany Software Engineering: A Practitioner’s Approach, 7/e (McGraw-Hill 2009). Slides copyright 2009 by Roger Pressman.