Abstract: The reality of component-based development is often very different from the commonly held notion that it is a low risk development strategy, which provides a simple and rapid mechanism for increasing the functionality and capability of a system. In reality component-based development carries significant risk throughout the system life cycle. These risks are related to the nature of COTS software, the development process, component technologies and vendor support. This paper describes an approach to developing component-based systems that incorporates risk management in the development process.