Skip to Content
App Development
7 minutes read

What Is Risk Management and Why Is It Important to App Development

By Robert Kazmi
By Robert Kazmi
App Development
7 minutes read

At some point, every company owner must ask themselves how they can identify, manage, and mitigate potential issues before they begin to negatively affect business operations. This concept is known as risk management. But what is risk management and why is it important? Particularly, how is risk management important when it comes to app development? 

Risk management involves assessing and addressing different aspects of a company’s business model, including budget, employment, project management, marketing, product production, and other areas that have the potential to cause problems for the company either immediately or down the line. Risks can range in severity and type, however, they must be identified and resolved as quickly and efficiently as possible in order to prevent serious business issues and future complications. 

Having a risk management plan in place is especially important when it comes to app development and software engineering. App developers and business analysts must be able to identify risks quickly and effectively. If these risks are not addressed, they affect the quality of the software, app performance, and overall User Experience (UX).

In this post, we cover everything businesses need to know about potential app development risks, including different factors that can influence and lead to risks and effective risk management strategies that you can implement in the event that risk-related issues have already affected app development protocols. 

Risk Factors: Internal vs External Risks 

Risk factors are often defined as being either internal or external. Internal risk factors arise from within an organization and may be related to fraud, breach of contract, network security hacks, or poor management practices. External risk factors come from outside the company and are not directly caused nor controlled by the business. These can include fluctuations in exchange rates, interest rates, the stock market, political policies, laws, and most recently, the socio-economic changes caused by the pandemic. 

When it comes to app development, internal risks are usually attributed to a lack of software developer experience, poor Quality Assurance (QA) testing, and subpar (or non-existent) project management techniques. External risk factors may include rapid changes in smart device technology, changes in the kinds of software that are compatible with smart devices, or updates to app store policies.   

Risk Management Strategies

There are several different types of risk management strategies that companies can implement when building an app. These include, but are not limited to the following: 

Risk Identification

Risk identification is the process of identifying potential problems that can be detrimental to software development or the finished app itself. These risks are usually determined during Product Ideation, which is the initial phase of app development when businesses and developers review preliminary app concepts to determine the viability of an app, meaning its potential for success and the elements that may or may not work. 

Risk Analysis

After potential risks with an app have been identified, businesses and their app development partner can begin to analyze the effects that these risks might have on consumers as well as the company brand. Classifying the different risks based on criteria such as the probability of occurrence and impact is a useful step.

Risk Treatment 

Once you’ve identified all possible risks and analyzed their potential effects, you can start to implement risk treatment protocols. Risk treatment strategies involve examining all the risks, the severity of these risks, and creating a plan of action to either reduce or handle them, preferably in order of severity. This is the ideal time to create contingency plans, which can better help your business to have a protocol in place for addressing risks that may pop up as you continue along the app development process. 

There are several risk treatment strategies that you can employ, depending on the risk itself. Below are some of the most common types: 

Risk Avoidance

After identifying the risk, you may choose to avoid it altogether, which often involves eliminating certain features or functionalities from an app that may have demonstrated to pose risks. However, with risk avoidance, you also run the chance of forfeiting potential positive outcomes as well. It’s up to you to decide which risks are worth taking and which to avoid altogether. Your app developers can help you assess the pros and cons of executing a particular project plan so you can make an educated decision.  

Risk Reduction/Risk Loss Control

If there are certain features or functionalities you feel are absolutely vital to your app, you may choose to treat these using the risk reduction or risk loss control approach. With this method, you can implement small changes to your app that will allow certain elements of the software to be built, while at the same time, lowering the potential risks. If you opt for this risk treatment approach, it’s important to understand that the risks that were initially discovered may still occur even after implementing the changes. 

Risk Transfer

Transferring the burden of risk management to another party can be a good option for businesses that are not financially prepared to absorb the consequences of the risk. This might be a favorable option for companies who are outsourcing their software development or project management tasks. 

Risk Sharing

Another option for businesses that are outsourcing software or project management tasks is risk sharing. With this method, both the company that is outsourcing the tasks and the company or independent contractor that is executing them will share the responsibility of the risk, including financial consequences. 

Risk Retention

Companies that are prepared to bear the full burden of a risk can choose the risk retention approach to risk treatment. This method is best for companies that have the means to absorb all the costs related to the risk or for risks that may result in relatively minor consequences that will not have too much of a negative impact. 

Risk Monitoring

Staying on top of the risks you’ve identified is crucial to the app development process and to the success of your app in general. Your app development partner can monitor all identified risks and any others that may arise both during application development and after launch to ensure bugs and other threats are properly resolved. 

Hiring Risk Managers

Risk managers can help you stay on top of risks and will handle all the protocols associated with attending to and mitigating them. Risk managers can be hired full time to watch over all your company’s operations or as part of a specific project. If you choose the latter, your project’s risk manager will oversee the entire app development process from start to finish, carefully reviewing and performing QA measures to ensure that any and all potential risks are noted. They will also advise you regarding your options for mitigating or absorbing risks so you can determine the risk management plan that works best for your company. 


In this blog, we answered the critical question of “what is risk management and why is it important?” In sum, risks are potential threats that can hinder a business from accomplishing its goals. Specifically, in regards to app development, risks include the range of issues that can pop up as the application is being conceptualized, built, and/or launched. 

The sooner a company can implement risk identification and risk assessment protocols, the better it will be able to make smarter business decisions and successfully handle future obstacles. Risk management strategies can help reduce and contain these risks so your business can produce a high-quality application with outstanding UX. 

Girl With Glasses

Want to Build an App?

Request a free app consultation with one of our experts

Contact Us