Risk analysis is a technique used to identify and assess factors that may jeopardize the success of a
project
A project is any undertaking, carried out individually or collaboratively and possibly involving research or design, that is carefully planned to achieve a particular goal.
An alternative view sees a project managerially as a sequence of even ...
or achieving a goal.
This technique also helps to define preventive measures to reduce the probability of these factors from occurring and identify countermeasures to successfully deal with these constraints when they develop to avert possible negative effects on the competitiveness of the company.
One of the more popular methods to perform a risk analysis in the computer field is called facilitated risk analysis process (FRAP).
Facilitated risk analysis process
FRAP analyzes one system, application or segment of business processes at a time.
FRAP assumes that additional efforts to develop precisely quantified risks are not cost-effective because:
* such estimates are time-consuming
* risk documentation becomes too voluminous for practical use
* specific loss estimates are generally not needed to determine if controls are needed.
* without assumptions there is little risk analysis
After identifying and categorizing risks, a team identifies the controls that could mitigate the risk. The decision for what controls are needed lies with the business manager. The team's conclusions as to what risks exist and what controls needed are documented along with a related action plan for control implementation.
Three of the most important
risk
In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environm ...
s a software company faces are: unexpected changes in revenue, unexpected changes in costs from those budgeted and the amount of specialization of the software planned. Risks that affect revenues can be: unanticipated competition, privacy, intellectual property right problems, and unit sales that are less than forecast. Unexpected development costs also create the risk that can be in the form of more rework than anticipated, security holes, and privacy invasions.
Narrow specialization of software with a large amount of research and development expenditures can lead to both business and technological risks since specialization does not necessarily lead to lower unit costs of software.
Combined with the decrease in the potential customer base, specialization risk can be significant for a software firm. After probabilities of scenarios have been calculated with risk analysis, the process of
risk management can be applied to help manage the risk.
Methods like applied information economics add to and improve on risk analysis methods by introducing procedures to adjust subjective probabilities, compute the value of additional information and to use the results in part of a larger
portfolio management problem.
See also
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Benefit risk
When the actual benefits of a venture are less than the projected or estimated benefits, the result is known as a benefit shortfall.
If, for instance, a company is launching a new product or service and projected sales are 40 million dollars per ...
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Optimism bias
Optimism bias (or the optimistic bias) is a cognitive bias that causes someone to believe that they themselves are less likely to experience a negative event. It is also known as unrealistic optimism or comparative optimism.
Optimism bias is commo ...
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Reference class forecasting
Reference class forecasting or comparison class forecasting is a method of predicting the future by looking at similar past situations and their outcomes. The theories behind reference class forecasting were developed by Daniel Kahneman and Amos T ...
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Extreme risk
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Risk management
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Peren–Clement index
References
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* Hiram, E. C., Peren–Clement Index, 2012.
* Roebuck, K.: Risk Management Standards, 2011.
* Wankel, C.: Encyclopedia of Business in Today's World, 2009.
External links
Risk Management Guide for Information Technology Systems
Formal sciences