That means that if I'm a recording artist, I would be a fool to make the reward a copy of the finished album because that means that if the album is never completed, the reward cannot be delivered and I would therefore have to refund money I already spent.
If it's a case of "I've written an albums worth of music, but I need $ for studio time, post-production and pressing CDs", then it should be low risk for the artist. You should know how much those things cost, and set your goal accordingly.
However, if you want the money to take X months off work and write the music, then go to the studio ..., that will create risk for you. What if you don't get a CD worth of music written in those X months? (Short answer: Just record random crap, nothing says people have to enjoy your rewards)
The risks for the producer are: 1) If the project is something that is difficult to cost up-front (like all these games that get funded on KS) 2) Your rewards are things you're inventing just for KS (like T-Shirts). Those things cost you money, that money comes out of your total pool, so you need to put extract capacity into the pool to pay for the production of the extras. Getting that right can be harder than people think.
All those KS projects that amount to fund my (team's) time to develop stuff are high risk for both the backers and the producer (if it goes wrong, the producer will owe money, but the backers won't ever get what they're owed)
The projects that are about funding the production phase of a project after the producer has poured their own time into the design phase are much more in line with what KS's ToS actually expect.
I've heard too many horror stories about people on KS offering tees for $X only to find that the screen printer didn't mention a bunch of fees relating to setup/fulfillment/shipping and the true cost is $X*2 and the creator ends up spending a ton of energy and money trying to fix the issue.
Disclaimer: I work for Teespring, and this is exactly what we do (so I may be biased).