In the context of PRINCE2 7, the Risk Management Approach is a fundamental management product created during the 'Initiating a Project' stage. It serves as the definitive guide describing how risk will be managed throughout the project lifecycle. Its primary purpose is to ensure that risk managemen…In the context of PRINCE2 7, the Risk Management Approach is a fundamental management product created during the 'Initiating a Project' stage. It serves as the definitive guide describing how risk will be managed throughout the project lifecycle. Its primary purpose is to ensure that risk management techniques are applied consistently, effectively, and in alignment with corporate standards or programme policies.
This document details the specific risk management procedure—Identify, Assess, Plan, and Implement—tailored to the project's context. It specifies the tools and techniques to be utilized, such as PESTLE analysis for identification or probability-impact grids for assessment. Crucially, it defines the 'scales' for estimating probability, impact, and proximity, ensuring that qualitative terms like 'high impact' or 'imminent' are understood uniformly across the project team.
Furthermore, the approach delineates clear roles and responsibilities, distinguishing between the Risk Owner (accountable for managing the risk) and the Risk Actionee (responsible for executing the specific response actions). It also articulates the project's risk appetite and tolerance thresholds, setting specific boundaries on how much risk the Project Board is willing to accept before escalation is required.
From a Practitioner perspective, the critical skill lies in tailoring this document. In a simple environment, the Risk Management Approach might be a brief section within the Project Initiation Documentation (PID); in complex environments, it acts as a comprehensive standalone document. It also dictates how the Risk Register is set up and maintained, and how risks are reported via Highlight and Checkpoint Reports. By defining these 'rules of the game,' the Risk Management Approach transforms risk management from an ad-hoc activity into a structured, proactive discipline that secures the project's objectives against uncertainty.
Mastering the Risk Management Approach in PRINCE2 Practitioner v7
What is the Risk Management Approach? In PRINCE2 v7, the Risk Management Approach is a key management product created during the Initiating a Project process. It describes the goals of applying risk management, the procedure to be adopted, the roles and responsibilities, the risk tolerances, the timing of risk management activities, and the tools and techniques to be used. Essentially, it acts as the 'rulebook' for how the project team will handle uncertainty.
Why is it Important? It ensures consistency. Without a defined approach, risk assessment is subjective (e.g., one person's 'High' impact is another person's 'Medium'). It sets the Risk Appetite for the project, ensuring the project manager knows how much risk the project board is willing to accept before escalation is required.
How it Works The Project Manager creates this document based on the Project Mandate and corporate standards. It defines: 1. Scales: How to measure Probability and Impact. 2. Categories: Buckets for risks (e.g., Strategic, Operational, Commercial, PESTLE). 3. Proximity: Definitions for when a risk might happen (e.g., Short term vs. Long term). 4. Reporting: How often risk is discussed and in what format.
Exam Tips: Answering Questions on Risk Management Approach When facing Practitioner scenarios, focus on the following logic:
1. Distinguish Strategy from Record Always ask: Is this about the rules or the specific risk? If the scenario discusses how to assess risks, definitions of impact scales, or who is responsible for risk, the answer lies in the Risk Management Approach. If the scenario discusses a specific threat (e.g., 'The vendor might go bankrupt'), that belongs in the Risk Register.
2. Tailoring is Key PRINCE2 requires the approach to be tailored to the project's environment. In the exam, you may be asked to critique a draft Approach. - Check for complexity: Is the approach too complex for a simple project? (e.g., requiring complex quantitative analysis for a small internal event). - Check for standards: Does it align with corporate standards mentioned in the scenario?
3. Specific Contents to Memorize Ensure you know that the following are defined in the Approach: - Risk Budget: The money set aside to fund specific management responses. - Early Warning Indicators: Signs that risks are emerging. - Risk Tolerance/Appetite: The threshold for escalation.
4. Common Traps A common exam trap suggests putting specific risk response actions (like 'Buy insurance') in the Approach. This is incorrect; specific responses go in the Risk Register. The Approach only defines the types of responses available (e.g., 'We will use Threat responses: Avoid, Reduce, Transfer, Share, Accept').