Software companies are now using Distributed Agile Development (DAD) in order to create high quality solutions, which aligns with the business priorities of lesser time and cost. Although, DAD is beneficial, there are significant risks involved in such projects. In order to minimize the adverse effect of risks on DAD projects, it is imperative to understand, how the risks impact the project performance goals including ‘Time’, ‘Cost’ and ‘Quality’. In this paper we present a goal driven approach for managing risks in DAD projects. This approach of risk management will enable project managers to identify the most important risks with respect to the goal to be achieved and focus on managing those risks first. The study shows that if ‘Time’ is a considered goal for a DAD project, the most important risks that would need consideration are related to requirement management, architecture changes and coordination issues between stakeholders. Similarly, if ‘Quality’ is the primary performance goal in a DAD project, it would be necessary to first deal with risks related to internal and external communication in the organization, team collaboration and requirement documentation availability. The awareness of top ranking risk factors that impact a particular project goal will assist the projects managers to control the risks in a way that the desired project goals can be achieved.
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