Types of Risks in Software Projects

Are you developing any Test plan or Test strategy for your project? Have you addressed all the risks properly in your Test plan or Test strategy?

As testing is the last part of the project, it’s always under pressure and time constraint. To save time and money you should be able to prioritize your testing work.

How will you prioritize testing work? For this, you should be able to judge more important and less important testing work. How will you decide which work is more or less important? Here comes the need for Risk-Based Testing.

Types of Risks in Software Projects

What is Risk?

“Risk is an uncertain future event with a probability of occurrence and potential for loss”

Risk identification and management are the main concerns in every software project. Effective analysis of software risks will help in effective planning and assignment of work.

In this tutorial, we will cover the different “Types of Risks”. In our upcoming tutorials, we will try to focus on Risk Identification, Risk Management, and Mitigation.

Risks are identified, classified and managed before the actual execution of the program. These Risks are classified into different categories as elaborated below.

Categories of Risks

#1) Schedule Risk

Project schedules get slipped when project tasks and schedule release risks are not addressed properly. Schedule risks mainly affect a project and finally on the company’s economy and may lead to project failure.

Schedules often slip due to the following reasons:

  • Wrong time estimation.
  •  Resources are not tracked properly. All resources like staff, systems, skills of individuals, etc.
  •  Failure to identify complex functionalities and time required to develop those functionalities.
  •  Unexpected project scope expansions.

#2) Budget Risk

Budget risk includes the following:

  •  Wrong budget estimation.
  •  Cost overruns
  •  Project scope expansion

#3) Operational Risks

Risk of loss due to improper process implementation, failed system or some external event risks.

Causes of Operational Risks:

  •  Failure to address priority conflicts.
  •  Failure to resolve responsibilities.
  •  Insufficient resources
  •  No proper subject training.
  •  No resource planning
  •  No communication within the team.

#4) Technical Risks

Technical risks generally lead to failure of functionality and performance.

Causes of Technical Risks are:

  •  Continuously changing requirements
  •  No advanced technology is available or the existing technology is in the initial stages.
  •  The product is complex to implement.
  •  Difficult project module integration.

#5) Programmatic Risks

These are external risks beyond the operational limits. These are all uncertain risks that are outside the control of the program.

External events can be:

  •   Running out of funds.
  •   Market development
  •   Changing customer product strategy and priorities.
  •   Government rule changes.


These are all the most common categories in which Software Project Risks can be classified.

We hope this tutorial would have given you a clear insight into what Risk is along with its categories.

Please share your thoughts in the comments section below!

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