The advantages of using PRINCE2 in Risk Management

Risk ManagementWhat is a risk? If you were to ask 10 people this question I would wager that at least half of them would refer to threats or negative possibilities. Indeed the Oxford Dictionary describes risk as “a situation involving exposure to danger”. However if we take the PRINCE2 definition of risk, “an uncertainty of outcome, whether positive opportunity or negative threat”, one can see straight away an advantage of looking at risk management with a PRINCE2 mindset. Positive things might happen as well as negative and if there is the possibility ofsomething positive happening then it makes good sense toexploit those situations,

In terms of negative threat, the earlier we identify a negativerisk in a project the cheaper it will be to manage, exploit or avoid it altogether. PRINCE2 prescribes undertaking risk analysis in the very first process of a project. What are the big, obvious risks? How can we build our project to avoid the negative risk and exploit the positive opportunities? Assessing these options upfront will reduce the likelihood of expensive changes in direction or scope later in the project.

PRINCE2’s approach to risk management is based on the OGCs publication ‘Management of Risk: Guidance for Practitioners’ (MoR) which documents 9 risk management principles:

1. Understand the projects context
2. Involve stakeholders
3. Establish clear project objectives
4. Develop the project management approach
5. Report on risks regularly
6. Define clear roles and responsibilities
7. Establish support structure and a supportive culture for risk management
8. Monitor for early warning indicators
9. Establish a review cycle and look for continual improvement