In the context of the Initiating a Project process within PRINCE2 7, preparing the Risk Management Approach is a foundational activity dedicated to defining how uncertainty will be governed and controlled throughout the project lifecycle. This activity ensures that the project management team and s…In the context of the Initiating a Project process within PRINCE2 7, preparing the Risk Management Approach is a foundational activity dedicated to defining how uncertainty will be governed and controlled throughout the project lifecycle. This activity ensures that the project management team and stakeholders possess a shared understanding of the specific standards and procedures required to manage threats and opportunities effectively. The Project Manager is responsible for creating this document, often tailoring it from existing corporate or programme standards to suit the specific scale and complexity of the project. The approach details the specific techniques for identifying and assessing risks, establishing the scales for probability and impact to ensure consistent estimation. It defines the project's risk tolerance and risk appetite, setting the boundaries for what level of risk is acceptable before escalation to the Project Board is required. Crucially, this activity assigns clear roles and responsibilities, identifying who is responsible for owning risks and executing response actions. It also establishes the reporting requirements and the timing of risk management activities, such as scheduled reviews or workshops. The document may also define a risk budget specifically set aside for funding risk responses. Once drafted, the Risk Management Approach is reviewed by Project Assurance and ultimately approved by the Project Board as part of the Project Initiation Documentation (PID). This structured preparation moves risk management from ad-hoc firefighting to a proactive, controlled discipline essential for project success.
Prepare the Risk Management Approach - PRINCE2 Practitioner v7
Concept Overview In the PRINCE2 Initiating a Project process, the Project Manager must establish the rules and procedures for how risk will be handled throughout the lifecycle. This activity is called Prepare the Risk Management Approach. It involves creating a management product that defines the techniques, standards, and responsibilities for risk management to ensure consistency and control.
Why is it Important? Without a formally agreed approach, risk management becomes ad-hoc and inconsistent. This activity is vital because: 1. Standardization: It ensures the project team uses a common set of scales (e.g., what defines a 'High' probability) and categories. 2. Alignment: It ensures project risk management aligns with corporate or programme risk policies. 3. Clarity: It defines specific roles, such as the Risk Owner and Risk Actionee, ensuring accountability.
How it Works The Project Manager creates this document by consulting with stakeholders and reviewing the Project Brief. Key elements defined include: 1. The Procedure: How risks will be identified, assessed, planned, and implemented. 2. Scales and Metrics: Definitions for probability, impact, and proximity (e.g., 'High Impact' = >10% budget increase). 3. Reporting: How and when risk information will be communicated to stakeholders. 4. Risk Budget: Whether a specific budget is set aside for funding risk responses. 5. Tools: The format of the Risk Register and any software required.
Exam Tips: Answering Questions on Prepare Risk Management Approach Practitioner questions will test your ability to judge whether a Risk Management Approach is appropriate for a given scenario. Use these tips to guide your answers:
1. Look for 'Tailoring': Does the approach fit the scenario? If the project is simple and low-cost, the Risk Management Approach should not mandate complex quantitative analysis (like Monte Carlo simulations). If the answer option makes the process overly bureaucratic for a small project, it is likely incorrect.
2. Check the Scales: A common exam trap involves incorrect definitions of probability or impact. Check the scenario's financial data. If the project budget is $50,000, but the Risk Management Approach defines 'Low Impact' as 'Loss of $100,000', the approach is flawed.
3. Distinguish Approach vs. Register: The Approach is the rulebook. The Register is the log of events. If a question asks what belongs in the Risk Management Approach, do not select specific risks (e.g., 'Risk #4: Vendor delay'). Select definitions (e.g., 'Definition of Impact Scales').
4. Corporate Alignment: If the scenario states that the organization has a Central Risk Team or a specific risk policy, the project's approach must align with it. An answer that ignores corporate mandates without justification is usually wrong.