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Case Study 03: Risk-Based Regression Testing in a Finance domain

Updated: Sep 4



Background: A financial services company developed and maintained a complex software platform for financial management. With regulatory changes and evolving market requirements, ensuring software stability amidst frequent updates was critical.


Here’s an overview of what risk-based regression testing involves and how it's applied in a financial context:



Strategy: The testing team implemented a risk-based regression testing approach, focusing testing efforts on areas of the application most susceptible to regression issues. They collaborated closely with business analysts and domain experts to identify critical functionalities and prioritize test cases accordingly.


Risk Identification: Determine the risks associated with the finance transactions. What if there are software changes? What if there is a downtime? Are there any workarounds? Are there any options to recover the frauds or invalid transactions? If there are any, is there a log facility to get sufficient information?

This includes analyzing which parts of the system are most likely to have defects or are critical to business operations. Therefore, risk identification in many aspects is the first key thing.


  • Risk Assessment: Assess the impact and likelihood of each risk. Consider factors like data sensitivity, transaction volume, and potential financial loss.


  • Data Sensitivity: Financial software handles sensitive data like personal identification information, credit card numbers, bank account details, and transaction records. If a defect leads to a data breach or corruption, the impact could be severe, including reputational damage, legal consequences, and financial loss. High-sensitivity areas should be tested rigorously. Therefore, proper validations are required for these data fields.


  • Transaction Volume: Financial software often processes large volumes of transactions. A defect in high-volume areas can lead to significant financial loss, data inconsistencies, or service disruptions. Test cases should focus on ensuring these transactions are accurate and reliable.


  • Potential Financial Loss: Some parts of financial software are directly linked to revenue generation, such as payment gateways or trading systems. A defect in these areas could result in lost revenue, unauthorized transactions, or fraud. Test cases should verify the integrity and security of these components.


These areas need to be tested thoroughly. Therefore, the team always ensured the test coverage by adhering with test case designing techniques.

Generating mind maps, flow charts or decision tables always helped to ensure the test combinations. Therefore, deriving test cases based on that ensures the full test coverage. Preparing the Traceability matrix also ensured the test coverage with business requirements.

Therefore, going with these test procedures ensures the full test coverage in these risky functions.


Risk-based test prioritization: This is the next step after identifying the risks and doing a risk assessment. Risk-based regression testing in financial software involves prioritizing test cases based on the potential risks associated with the software changes. This approach is crucial for financial systems, which often handle sensitive data and complex transactions, as it focuses testing efforts on the areas where failure could cause the most significant harm.


Implementation: Leveraging test management tools, the team categorized test cases based on their impact on core business processes and requirements. The team adopted a hybrid testing approach, combining automated regression tests for existing functionalities with manual testing for changes and edge cases.


Results: The risk-based regression testing approach proved instrumental in optimizing test coverage and resource allocation. By directing testing efforts toward high-impact areas, the team maximized the effectiveness of regression testing while minimizing redundant tests. As a result, the software exhibited enhanced stability, resilience to change, and regulatory compliance according to the business requirements.


In conclusion, the adoption of a risk-based regression testing approach significantly improved the reliability and robustness of the financial services company's software platform. By prioritizing test cases according to identified risks and focusing on critical functionalities, the testing team was able to effectively manage the complexities of frequent software updates in a highly regulated environment.


Key outcomes of this approach included enhanced software stability, reduced redundancy in testing, and more efficient resource allocation. The close collaboration with business analysts and domain experts facilitated a comprehensive risk assessment, which underpinned the success of the testing strategy. The team's meticulous focus on data sensitivity, transaction volume, and potential financial loss ensured that critical areas of the platform were thoroughly tested, reducing the likelihood of severe defects and their associated risks.


Overall, the risk-based regression testing approach proved to be a strategic and effective solution for managing the challenges of a complex financial software platform. It serves as a valuable model for other organizations in the financial sector seeking to maintain high-quality software in a dynamic regulatory landscape.


I recently visited a bank and had to wait for over an hour. While I was there, I noticed a few customer complaints. One involved a young customer who was having trouble with an online fund transfer. By mistake, he had sent money to the wrong account number. As he was filing his complaint, the bank officer mentioned that the issue could have been reported through an online platform, saving him time for the bank. Then the customer responded that he had looked for such an option but couldn't find it. The officer then logged into the customer portal and showed him where it was.

The key point of this is that while it's crucial to prioritize the functionality of financial transactions, it's equally important to overlook the UI/UX aspects. Ignoring them can lead to frustration and mistakes that could have been avoided.


I'd like to hear your perspective on this, too.



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