| Step 1 - Having a risk management strategy | | | | likelihood in percentage terms and an impact should it |
| In my experience risk management is something that | | | | occur in monetary terms. By multiplying one by the |
| is talked about a lot but rarely done. One problem is | | | | other an expected value can be calculated. Totalling |
| that people don't know who should be doing what. | | | | the expected values of all the risks gives a monetary |
| To help with this Prince2 2009 introduces a Risk | | | | figure that easily shows the exposure of the whole |
| Management Strategy. It outlines the way in which | | | | project to risk. |
| risk will be identified, evaluated and dealt with in a | | | | Step 5 - Considering the effect of time on a risk. |
| project. It shows who should be responsible for | | | | Prince2 has always recommended recording when |
| carrying out the various risk management roles. It | | | | each risk will occur. It calls this the proximity of the |
| also sets out how much risk an organisation is willing | | | | risk. But in this latest release it gives examples of |
| to bear. The strategy is put together at the outset | | | | how you might categorise proximity, such as |
| of the project; everyone reviews and signs up to it. | | | | imminent, in the next stage of the project or after |
| Step 2 - Risk identification Techniques | | | | the project. It also recommends considering whether |
| Where do you start when it comes to identifying all | | | | the probability of the risk occurring and/or the impact |
| the potential risks in your project? The new manual | | | | on the project if they do occur, might vary over |
| gives a number of approaches. These include | | | | time. Having this information can help focus on risks |
| reviewing lessons learned from previous projects, | | | | that are of a more pressing concern. |
| carrying out a risk brainstorming session, using an | | | | Step 6 - Giving a clearer approach to help define risks |
| industry specific prompt list showing likely areas of | | | | Rather than just thinking about the event that may |
| risk or creating a risk breakdown structure. The latter | | | | or may not occur such as a road collapsing |
| is a hierarchical diagram like an organisation chart. It | | | | underneath a heavy load, the new manual considers |
| can be sub divided in a range of ways, for example | | | | what could cause the event. This allows for a deeper |
| by product, by team or using PESTLE (political risks, | | | | analysis of any individual risk. If the road collapses it |
| economic risks, social risk, technological risks, legal | | | | could be caused by heavy rain, bad driving or initial |
| risks, environmental risks) It can be used as a focal | | | | poor construction of the road by the council. |
| point for a workshop to identify all risks in each area | | | | Understanding what are the most likely causes for |
| of the project. | | | | each potential risk event, can help implement better |
| Step 3- Early warning indicators | | | | mitigation plans to deal with them |
| It is all too easy for a project manager to myopically | | | | Step 7 - Focus on opportunities |
| focus on a small set of performance areas such as | | | | Risks can be opportunities. For example a new |
| work completed to schedule. The new manual | | | | technology might appear to speed the programming |
| suggests a range of other early warning indicators | | | | of a software module. Prince2 2009 gives three |
| that identify how the project is performing. For | | | | ways of approaching an opportunity: exploit it by |
| example percentage of approvals accomplished, | | | | doing something that ensures it occurs, increase the |
| number of issues being raised and number of defects | | | | probability or impact of the event occurring or simply |
| being captured in quality inspections. Reviewing all | | | | reject the opportunity. In practice a good project |
| aspects of a project increases the likelihood of | | | | manager is always looking for opportunities to |
| identifying more critical risks | | | | improve their project, but making this explicitly part |
| Step 4 - Assessing the overall risk exposure | | | | of the risk management process, improves the |
| Prince2 2009 gives an approach to show the overall | | | | probability of spotting more. |
| risk situation of a project. Each risk is given a | | | | |