Risk management is recognized as a key process area in software development. Most risk management literature relates to heavyweight plan-driven processes and typically assumes that, for example, requirements have been agreed and signed off in advance of development. On the other hand, Agile Software Development uses an iterative approach to software construction, aimed at reducing development time, prioritising value, while improving software quality and inherently reducing risk (Cockburn and Highsmith 2001). This paper intends to demonstrate the idea of software agents to help manage risks in project development. This is achieved by using software agents to carry out risk identification, risk assessment and risk monitoring, the agents making use of data collected from the project environment. In the next section, we have highlighted the issues identified in risk management for an agile environment which further will be used as an input to the tool. In the approach used, the project manager has to define these elements: project goals, problem scenarios, consequences, risk indicators, project environment data as well as specifying risk rules using a predefined ‘Rule template’. Next, the proposed Agile risk tool (ART) model is discussed, focusing on the development of the tool. This shows how the risk management activities are decomposed into agents, as well as how the interaction between agents is used to ensure that risks are appropriately managed. The use of a risk register is presented where a list of risks triggered in the project is displayed at a dashboard. The big advantage of the approach is that software agents can be used to detect risk and react dynamically to changes in agile project environment. To validate the approach some innovative case studies using student projects are described. Evidence is therefore provided for the feasibility and applicability of the approach and finally some conclusions and discussion is given.