Risk Vs Issue in Agile Environment

As a project manager, it’s very important to know how to deal with and manage risks and issues that might occur as the project unfolds. What is the difference between risks and issues, and how can you handle them effectively so that the course of the project is not derailed? Let’s find out!

Difference Between Risk and Issue

The PMBOK, which is the definitive PMI guide on Project Management, defines risk as “an uncertain event or condition that, if it occurs, has a positive or a negative effect on project’s objectives.” A risk, therefore, has not yet happened—but there is a probability (however small) that it might happen in the future. 

An issue, on the other hand, is something that has happened and is impacting the project goals or smooth progress. There is no uncertainty associated with an issue, as it has already occurred; whereas there is an element of uncertainty around a risk since it may or may not happen. 

A risk can be mitigated, while an issue can only be managed. 

Here are a couple of examples, so that you can clearly understand the difference between the two. 

1. Risk: There is a possibility of a fire occurring in a food manufacturing factory, if there is combustible dust that is not handled correctly. 

Issue: Some combustible dust has come into contact with an ignition source and a small fire has occurred. 

2. Risk: Midway through the project, a key resource might get pulled into another project, or might have to leave due to other reasons. 

Issue: Midway through the project, one critical team member has left the company, and another has taken leave due to health issues.

The following table clearly lays out the differences between them.

Types of Risk in an Agile environment

An Agile environment is one in which the work is carried out in short cycles or iterations, and any changes in the requirements can be accommodated at any stage. There are frequent reviews and adaptation of plans so that the product closely matches the industry needs and evolving customer expectations.

This is very different from a traditional or waterfall project development lifecycle, which is a linear and sequential model that is rigid and does not readily accommodate change. 

The types of risks in an Agile environment may include the following: 

• Budget risk – There can be cost overruns due to changes in the requirements. As the product backlog items might get revised at the end of each cycle, it is very difficult to pin down the budget and stick to it over the course of the project. 
• Schedule risk – When changes happen and the team is required to course correct, they may not be able to keep up the time schedules as planned. The opposite can also happen; when the requirements become fewer than expected, the project could be completed sooner than was previously planned. 
• Quality risk – There is always the risk that the quality might not match what is expected, and the agreed upon parameters are not met. 
• Performance risk – There could be risks that occur due to poor performance of the team as a whole or lacklustre performances by some team members. This may result in a failure of the product or service, which may not rise to customer expectations. 
• Governance risk – Large and complex projects run the risk of uncertainty over the ethics, company reputation, and management rules on governance. 
• Strategic risk – This refers to planning strategies not matching the product or service goals, or the wrong technologies or resources being deployed. 
• Operational risk – Improper implementation, losses in production, errors in distribution, and issues with procurement can lead to operational risks. 
• Security risk – There is always some risk that is associated with cybersecurity or information security practices that safeguard the data or information of the organization. 
• Financial risk – The market is always in a state of flux, and this comes with uncertainties around currency fluctuations, interest rates, liquidity, and credit and commodity risks. 
• Legal risks – There could be organizational risks associated with litigation, non-compliance with regulatory obligations, and contracts. 
• External risks – Risks due to outside factors can be manmade or natural, and include floods, storms, earthquakes, sabotage, human error, civil unrest, accidents or mishaps, vandalism, labour strikes, and terrorism, among others.

How are risks managed in Agile?

Agile environments are highly flexible and responsive to change. As such, risk management in Agile is a continuous process where any available information is evaluated and possible events are anticipated and avoided. Frequent retrospectives help to reflect on the completed work, inspect what is completed, and course correct to suit the changing circumstances in ways that mitigate or ameliorate the risk. 

A risk in Agile is first identified, and then assessed and evaluated, before it can be controlled and monitored to prevent recurrence. Risk management occurs during these Agile events: 

• Daily Standup where there is visibility into work done and work planned 
• Budget planning events identify financial risks 
• Product Refinement and Grooming identifies product risks 
• Planning events identify risks in the process and the product 
• Reviews and Demos identify delivery and risks due to incorrect product development 
• Retrospectives and I+A workshops allow time for reflection, inspection and adaptation 

Agile risk is always changing and can be efficiently addressed at the point of occurrence. 

What are issues in an Agile environment?

Any of the risks mentioned in the sections above could be realized and can potentially become an issue that has to be managed.

As opposed to traditional waterfall project management, in an Agile environment, issues can be addressed as soon as they are identified. They can be dealt with in the same cycle instead of waiting till the end of the project as would be the case in a waterfall process.  Agile projects look for risks and issues throughout the lifecycle of the project and are therefore better equipped to deal with and address them with workable solutions.

Wrapping up 

While Agile is not a silver bullet, the basic tenets of Agile are inherently designed to address risk early on and in an effective manner. Agile processes are transparent, which means that everyone has visibility into what is being done, and risks can be identified easily.  As planning is collaborative and the team is multifunctional, their collective knowledge can be harnessed to mitigate the risk. Again, as the customers are involved through the lifecycle, they are also able to voice their opinions and give feedback. This further reduces risks. 

When risks are identified more easily, solutions can be found to prevent them from turning into issues that will impair the successful completion of the project on time, within budget and to the quality expected.