1. Why is Risk Management Important?
In order for organisations to achieve their objectives, a certain amount of risk taking is required. Effective management of risk helps you to manage projects and improve operational performance by contributing to:
• increased certainty and fewer surprises;
• better service delivery;
• more effective change management;
• more efficient use of resources;
• better management at all levels through improved decision making;
• reduced waste and better value for money;
• management of contingent and maintenance activities.
2. Considerations for Effective Risk Management
At a high level there are eight questions that should be addressed:
1. Do senior management support and promote risk management?
2. Are people equipped and supported to manage risk well?
3. Is there a clear risk strategy?
4. Are there effective arrangements for managing risks?
5. Do the organisation processes incorporate effective risk management?
6. Is Risk Assessment integrated with the organisation business plan and key objectives?
7. Are risks handled well?
8. Does risk management contribute to achieving outcomes?
3. How does PRINCE2 Project Management Minimise Risk?
PRINCE2 enables projects to have:
• A controlled and organised start, middle and end;
• Regular reviews of progress against plan and against the Business Case;
• Flexible decision points;
• Automatic management control of any deviations from the plan;
• The involvement of management and stakeholders at the right time and place during the project;
• Good communication channels between the project, project management, and the rest of the organisation;
• The PRINCE2 Risk Component incorporates the latest developments in the area of risk management.
4. Benefits of a Risk Management System
• Management become aware of otherwise ad-hoc Project risks and issues;
• Improved visibility through the availability of a large range of Automatically generated Reports on-demand;
• Increased certainty and fewer surprises;
• Better service delivery;
• Project risks and issues are managed more effectively;
• Change management is managed more effectively;
• Project resources are used more efficiently;
• Better management at all levels through improved decision making;
• Reduced time waste and better value for money;
• Management of contingent and maintenance activities
• High Visibility of Risks across multiple projects;
• Up to the minute accurate reporting on-demand of project activities;
• Issue Resolution;
• Decision Tracking;
• Risk Management linked to business plan and organisation objectives.
5. What is a Risk Log?
A Risk Log is a tool to support your risk management activities. The tool can be fully adapted to fit your needs and requirements. A Risk Log helps you to:
• create a Framework for Risk Management;
• manage risk Reporting to senior management, especially risks which cut across core business activities and organisational boundaries;
• maintain a clear Audit trail of decisions to ensure that risk management reflects current good practice, with quality assurance of key decisions as input to audit.