Market Risk
Part Of
Reduced By Practices
- Demand Management: Aligns production with market demand, reducing the risk of under or overproduction.
- Fundraising: Allows the startup to invest in market research and customer acquisition.
- Marketing: Promotes the software to reach potential customers and increase market share.
- Prioritising: Ensures that the most valuable features and opportunities are addressed first.
- Release: Delivering features means you get market feedback.
- Sales: Increases market penetration and customer base.
Market Risk is a term from finance:
"Market risk is the risk of losses in positions arising from movements in market prices." - Market Risk, Wikipedia
I face market risk when I own (i.e. have a position in) some Apple stock. Apple's stock price will decline if a competitor brings out an amazing product, or if fashions change and people don't want their products any more.
This risk applies equally well when building a software product, as the software you're building is effectively your stock and its value is whatever the market places on it (i.e. what people are willing to pay).
Even projects that are internal to a company are not immune: they still need to have a value to the company and therefore suffer Market Risk.
Since the market decides what it is prepared to pay, Market Risk tends to be outside your control. Although, as shown in the diagram, you can use tools like marketing to try and engage with your market and get them to see the value in what you are doing.