Numerous virtual reality (VR) systems have received regulatory clearance as therapeutic medical devices for in-clinic and at-home use. These systems enable remote patient monitoring of clinician-prescribed rehabilitation exercises, although most of these systems are nonimmersive. With the expanding availability of affordable and easy-to-use head-mounted display (HMD)-based VR, there is growing interest in immersive VR therapies. However, HMD-based VR presents unique risks. Following standards for medical device development, the objective of this paper is to demonstrate a risk management process for a generic immersive VR system for remote patient monitoring of at-home therapy. Regulations, standards, and guidance documents applicable to therapeutic VR design are reviewed to provide necessary background. Generic requirements for an immersive VR system for home use and remote patient monitoring are identified using predicate analysis and specified for both patients and clinicians using user stories. To analyze risk, failure modes and effects analysis, adapted for medical device risk management, is performed on the generic user stories and a set of risk control measures is proposed. Many therapeutic applications of VR would be regulated as a medical device if they were to be commercially marketed. Understanding relevant standards for design and risk management early in the development process can help expedite the availability of innovative VR therapies that are safe and effective.