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Written by Andy Trainer – Thu 12 Jul 2007
The purpose of the Risk theme is to identify, assess and control uncertainty and, as a result, improve the ability of the project to succeed.
Risk taking in projects is inevitable since projects are enablers of change and change introduces uncertainty, hence risk. Management of risk should be systematic and not based on chance. It is about the proactive identification, assessment and control of risks that might affect the delivery of the project’s objectives.
The project should establish and maintain a cost effective risk management procedure. The aim is to support better decision making through a good understanding of risks – their causes, likelihood, impact, timing, and the choice of responses to them.
Management of risk is a continual activity, performed throughout the life of the project. Without an ongoing and effective risk management procedure it is not possible to give confidence that the project is able to meet its objectives and therefore whether it is worthwhile for it to continue. Hence effective risk
management is a prerequisite of the continued business justification principle.
For risk management to be effective, risks need to be:
PRINCE2 recommends a risk management procedure comprising the following five steps:
The first four steps are sequential, with the ’Communicate’ step running in parallel because the findings of any of the other steps may need to be communicated prior to the completion of the overall process. All of the steps are iterative in nature in that when additional information becomes available, it is often necessary to revisit earlier steps and carry them out again to achieve the most effective result.