DAU GLOSSARY DEFINITION
Answers the questions, “What are the likelihood and consequence of the risk? And “How high is the risk?” Risk analysis provides an estimate of each risk's likelihood and consequence, and the resulting risk level to more effectively manage risks and prioritize risk mitigation efforts. The risk level is noted in the Risk Reporting Format adopted by the program.
Successful product development requires understanding and actively managing program risks. Risk management is an endeavor that begins with requirements formulation and assessment, includes the planning and conducting of a technical risk reduction phase if needed, and strongly influences the structure of the development and test activities. Active risk management requires investment based on identification of where to best deploy scarce resources.
PMs and staff should shape and control risk, not just observe progress and react to risks that are realized. Anticipating possible adverse events, evaluating probabilities of occurrence, understanding cost and schedule impacts, and deciding to take cost-effective steps ahead of time to limit their impact if they occur is the essence of effective risk management. Risk management should occur throughout the lifecycle of the program and strategies should be adjusted as the risk profile changes.
Risk Assessment is a key aspect of Risk Management, and one of those topics for which many claim to know, but which few implement well.