26 Oct 2016

PRINCE2 Risk Management

Posted by PRINCE2 Canada

PRINCE2 risk managementPRINCE2 Risk Management

In a project is risk inevitable?  It’s a question that I always ask at the beginning of the PRINCE2 risk session on the course.  Of course the answer to this is yes.  PRINCE2 describes uncertainty as a characteristic of a project.  Well in PRINCE2 uncertainty = risk.

The PRINCE2 risk theme describes a risk as “an uncertain event or set of events that, should it occur will have an effect on the achievement of objectives”.  Quite simply a PRINCE2 risk is something that you have identified that may happen and could have an impact on what you are trying to achieve.

Threat or Opportunity

It is said that the Chinese character for risk has 2 parts. One for danger and the other for opportunity.  Well the PRINCE2 risk theme also describes a risk as a threat or an opportunity.  When I first read this I thought that’s not right.  “A risk is something that if it happens will  harm my project not enhance it!”  But look at the description above again.  It does make sense.  It’s an uncertain event that could have a negative or positive impact on your project.

PRINCE2 Risk Theme

So if risk is a part of project life the key is to accept that and make sure you have a good procedure in place to identify, assess and control it.  This is where the PRINCE2 risk management theme comes in.  It tells you that you must prepare a Risk Management Approach (it gives you a description for one in the PRINCE2 manual) where you will document your procedures for controlling risk.

Not only that the PRINCE2 risk theme gives you a risk management procedure.  It has 5 steps to follow.  It is pretty much just commons sense but that’s what PRINCE2 is good at. Common sense.

PRINCE2 Risk Management Procedure

Step 1 – Identify

The PRINCE2 risk management procedure says first of all you need to identify the context of your project.  What are the specific objectives that are at risk and to prepare your Risk Management Approach.

You then need to identify the risks to your project.  Both threats and opportunities.  Once identified they should be recorded in the Risk Register.

Step 2 – Assess

The PRINCE2 risk management procedure then says that for each risk identified you need to estimate the probability, impact and proximity.  This will allow you to decide what risks are the ones you are going to keep more of an eye on.

You also need to think of the overall risk exposure of the project.  So you should also assess the net effect of all risks in the project.

Step 3 – Plan

The PRINCE2 risk management procedure then says you need to plan your response.  It gives you a number of response categories to think about.  Such as avoid the risk, reduce the risk, transfer the risk etc.  The PRINCE2 manual provides you with definitions and examples of these.

Step 4 – Implement

Well you have planned your response so the PRINCE2 risk management procedure now says you need to carry it out.  So the next step is to implement your action.

To help with this PRINCE2 identifies a couple of roles that need to be allocated.  The Risk Owner and the Risk Actionee.  The Risk owner would be a named individual who would be responsible for monitoring and controlling the risk whereas the Risk Actionee would be responsible for carrying out the response.  Now in reality it is most likely the same person that performs both roles but it can be different people.

Now these 4 steps – Identify, Assess, Plan and Implement happen in sequential order. The 5th step should happen continually. That step is…

Step 5 – Communicate

Communication is vital in project management and when managing risk.  You will need to communicate risks to other members of the team or to other stakeholders.  PRINCE2 gives you many ways of communicating about these risks through the set of management products it offers.  These can be used in the PRINCE2 risk management procedure to make sure you communicate effectively.

So risk is inevitable.  But as you can see from above PRINCE2 gives you the tools to be prepared.

 

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