PRINCE2 risk management requirements
Risk Management is defined as the systematic application of principles, approaches and processes to the tasks of identifying and assessing risks, planning and implementing risk responses and communicating risk management activities with stakeholders
Risk Exposure is defined as the extent of risk borne by the organization at the time
Effective risk management provides confidence that the project is able to meet its objectives and that the business justification continues to be valid
Risk management supports decision-making by ensuring that the project team understand not only individual risks, but also the overall exposure that exists at a particular time
For PRINCE2 Risk Management to be effective:
- Throughout the process, risk information must be communicated within the project and to stakeholders
- Risks that might affect the project achieving its objectives need to be identified, captured and described
- Each risk needs to be assessed to understand its probability, impact and timing (proximity) so that it can be prioritized
- Responses to each risk needs to be planned and assigned to people to action and own, then implemented, monitored and controlled
- The overall risk exposure needs to be kept under review, together with the impact of risk on the overall business justification for the project
A PRINCE2 project must define its Risk Management Approach which must cover:
- Assessing whether the risks have an impact on the project business justification
- How risks are identified and assessed
- How risks management responses are planned and implemented
- How the management of risk is communicated through the project life
- Assessing whether the risks have an impact on the project business justification
- Roles and responsibilities for risk management
For a project to be following PRINCE2, it must as a minimum:
- Cover how risks are identified and assessed, and how risk management responses are planned and implemented and how the management of risk is communicated throughout the project lifecycle.
- Assessing whether identified risks might have a material impact on the business justification of the project, this follows the PRINCE2 continued business justification principle
- The roles and responsibilities for risk management, this follows the PRINCE2 defined roles and responsibilities principle
- Maintain some form of Risk Register to record identified risks and decisions relating to the analysis, management and review
- Ensure that project risks are identified, assessed, managed and reviewed throughout the project lifecycle
- Use lessons to inform risk identification and management, this follows the PRINCE2 learn from experience principle
PRINCE2 requires that two products are produced and maintained:
The PRINCE2 Risk Management Approach
This describes how risk will be managed on the project and includes the specific processes, procedures, techniques, standards and responsibilities to be applied
The PRINCE2 Risk Register
This provides a record of all identified risks relating to the project, including their status and history. It is used to capture and maintain information on all the identified threats and opportunities relating to the project
Both products should be created during the initiating a project process.
The Risk Management Approach should be reviewed and possibly updated at the end of each management stage, it can also define how and when the Risk Register is reviewed and updated
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