ABSTRACT Software re-engineering has become a vital field of computer science and an active research area. The nature of software re-engineering is to improve or transform existing software so it can be understood, controlled and reused as new software. Re-engineering is frequently challenged, because certain risks will threaten the project success. In this article we have described some risks and their classification what we believe to be the most important. From the analysis of risks, some mitigation techniques have been suggested from the existing literature that helps to make the re-engineering projects more beneficial. Keywords Software re-engineering, risks, mitigation, analysis. 1. INTRODUCTION Software Re-engineering is the examination, reorganization, analysis and alteration of an existing software system. It helps to system. The process of restructuring,make them more maintainable and to reconstitute it in a new form and the subsequent implementation of the modified system. This process involves in order to get the target system according to the new the restructuring or recoding of a component or all parts of legacy system without affecting its functionality [1]. Re-engineering is a combination of other processes such as reverse engineering, re-documentation, translation, and forward engineering. The main purpose is to understand the specification, design, implementation of the legacy system and then to implement its modernize form to improve its overall functionality and performance. The difficulty lies in the conceptual understanding of the legacy system. Usually requirements, design and documentation of programming code is no longer available, or is out of date, so it is not clear to the software engineer that what types of functions are to be shifted. Often the software system contains major functions that are not needed anymore, and those should not be re-coded to the new system [2]. The re-engineering process is not risk free and faces various types of risks as software engineering other approaches face. The risk identification is crucial in development and evolution of a legacy system. Risk identification is very important for effective risk assessment, risk analysis, and management and mitigation of risks. In our proposed work, the potential challenges and risks during transformation are analyzed and then categorized on the basis of severity and nature. A well monitoring technique has been described for the categorized risks. It will help a re-engineering system towards successful and easy maintenance and cost benefit with reduced risk.