Risk is defined as "The possibility of suffering harm or loss; danger." Even if we're not familiar with the formal definition, most of us have an innate sense of risk. We are aware of the potential dangers that permeate even simple daily activities, from getting injured when crossing the street to having a heart attack because our cholesterol level is too high. Although we prefer not to dwell on the myriad of hazards that surround us, these risks shape many of our behaviors. Experience (or a parent) has taught us to look both ways before stepping off the curb and most of us at least think twice before ordering a steak. Indeed, we manage personal risks every day.
Risks in Software Project Management

Unlike the hazards of daily living, the dangers in the young and emerging field of software engineering must often be learned without the benefit of lifelong exposure. A more deliberate approach is required. Such an approach involves studying the experiences of successful project managers as well as keeping up with the leading writers and thinkers in the field. One such writer in the area of risk is Dr. Barry W. Boehm. In his article "Software Risk Management: Principles and Practices" he lists the following top 10 software risk items:

1. Personnel Shortfalls
2. Unrealistic schedules and budgets
3. Developing the wrong functions and properties
4. Developing the wrong user interface
5. Gold-plating
6. Continuing stream of requirements changes
7. Shortfalls in externally furnished components
8. Shortfalls in externally performed tasks
9. Real-time performance shortfalls
10. Straining computer-science capabilities

How to Manage

In the same article, Dr. Boehm describes risk management as being comprised of the following activities:

* Risk Assessment (figuring out what the risks are and what to focus on)

• making a list of all of the potential dangers that will affect the project
• assessing the probability of occurence and potential loss of each item listed
• ranking the items (from most to least dangerous)

* Risk Control (doing something about them)

• coming up with techniques and strategies to mitigate the highest ordered risks
• implementing the strategies to resolve the high order risks factors
• monitoring the effectiveness of the strategies and the changing levels of risk
  throughout the project