Agile boasts a collaborative structure, which naturally leads to greater transparency and communication for tech teams. By design, it has a short feedback loop compared to other methodologies. When teams regroup on a frequent (even daily) basis, they are better equipped to react to scope and schedule changes and adjust as necessary. Such adjustments align the project continuously and provide teams with general guidance on value-based prioritization. For software development companies, this results in high-quality products and a quick trajectory to market.
However, Agile software development is not without pitfalls. It can be tricky to implement, particularly for teams and organizations that have utilized a traditional approach in the past. In addition, industries such as construction, manufacturing and healthcare engage in more stringent planning and decision-making, both of which require complex, structured risk management strategies to meet project delivery requirements.
There is a self-fulfilling prophecy in the world of Agile risk management. Agile neither offers a universal definition of risk nor provides a standardized approach to risk management. In many ways, the development team must handle high and low risks alike. Without the power Agile lends to transparency and communication, the results would be muddied.
According to a 2017 report by the Project Management Institute, 71% of surveyed organizations regularly incorporated Agile strategies into their projects. In addition, although the majority of senior executives agree that Agile is essential to the success of strategic initiatives, 2018 data indicates that Agile has not fully permeated the business world. This might be due, at least in part, to Agile’s lack of formalized risk management protocols. For many companies, traditional waterfall risk management methods are more rigorous when managing nontechnical risks than anything Agile offers.
Important Considerations In Agile Risk Management
Agile has historically considered risk from a narrower perspective. This seems counterproductive at first, as Agile focuses on continuous improvement and change — circumstances that sometimes seem to be risk conduits. In part, this narrow view is an extension of risk’s ill-defined nature in Agile’s methodology. However, risk is an inherent element of Agile. Thus, risk itself is not the issue. Instead, the problem is how risk management strategies are defined and applied in Agile.
Considering All Dimensions Of Risk
Agile teams often prioritize requirements and technical risks over other project risks. Although requirements and technical risks are most common in software development, teams must understand that risks are multifaceted and account for all pertinent aspects. When teams fail to consider other dimensions such as budget and funding, schedule, personnel, and project management methodology, they fail to develop the necessary mitigation plans to steer their projects toward success.
Assessing And Reassessing Risk Appetite And Threshold
Agile teams often fail to account for shifting risk appetites and thresholds — in other words, the risk exposure an organization is willing to accept. Because fast-paced pivoting is a defining characteristic of Agile projects, risk appetites and thresholds typically change. Those changes, however slight, must be monitored closely to ensure that teams understand the organizational impact posed by various risks. Such a thorough understanding helps teams develop a second-nature approach to identifying pertinent risks as they arise.
Understanding The Nature Of Responsibility
The nature of responsibility is among the least-defined aspects of Agile risk management. As Agile Project Management Academy founder Chuck Cobb explains, Agile project teams often lack designated project managers. Therefore, “the entire team owns responsibility for risk management. In a similar way, the entire team owns responsibility for project management.” Although Agile’s culture does not put risk at the forefront of conversations, Agile risk management requires open communication about potential risks throughout the software development life cycle. Techniques such as risk walling are invaluable for creating transparency, soliciting feedback and involving every person in risk monitoring throughout the project.
Embracing Positive Risk
A huge misconception, both in Agile and in the rest of the business world, is that all risk is detrimental to a project. In reality, risk can harm or help. Thus, businesses can accept and exploit positive risks while working to reduce or avoid negative ones. Marty Cagan of Silicon Valley Product Group acknowledges that risk is a necessary, albeit uncomfortable, element in the innovation process. Cagan advises product managers and development teams to encourage risk-taking, or at least consider what risks offer, before making any firm decisions.
Incorporating A Structured Risk Management Process
Although Agile is theoretically well equipped to handle risk, few formal practices exist. Perhaps this is purposeful — after all, each project is different and has its own overarching rules and external variables. However, to navigate all variables that may affect overall success, Agile projects require risk management standards for identification, analysis, treatment and continuous review. Such structure facilitates an ongoing process, both formally and informally. Teams must revisit and tailor their development techniques based on specific project needs, primarily in relation to risk fluctuations. For instance, Agile tools such as user story maps and Kanban boards should be adjusted to reflect risk-mitigating actions. A separate risk burn-down chart should also be prescribed to monitor the project’s health as the team removes those systematic risks.
Expecting The Unexpected
Agile is an invaluable methodology for many software projects. Given technology’s fast-paced and ever-growing nature, every team’s approach inevitably involves some detours. However, there is no way to avoid risk in software development altogether, so teams should not attempt to prevent it. Instead, they should adopt a risk-oriented Agile development process to better understand the nature of risk and brace the team for impact — or, preferably, soften the blow.
