Identifying PRINCE2 Risk – Part 1 

Identifying PRINCE2 Risk – Part 1

PRINCE2 models risk management with the procedure and it starts with identifying PRINCE2 risk.

The risk procedure shown below, has four elements and because these go around in a circle, they do not function as a cycle but rather they handle all risk within the project.

The PRINCE2 cycle is shown below on the left and as you can see, goes through an identify, assess, plan, and implement cycle with the communicate step taking place in parallel with the other four.

The diagram on the right-hand side below demonstrates that although a cycle, PRINCE2 risk management consists of a Risk Analysis set of steps and then Risk Management steps, and it is these that cycle around.

If you will, view risk analysis as sizing the risks and risk management as planning the responses and monitoring their effect.

Although the PRINCE2 Manual does not provide too much in the way of techniques, you can find lots to help with risk management and especially with risk identification and assessment.

The focus of this article is on identifying the risk and this is the first step and there are lots of techniques that can help with this and most of them are simple.

PRINCE2 Risk Categories and the Risk Checklists

One of the ways of categorizing PRINCE2 risk is to use the PESTLE acronym:

• Political
• Economic
• Sociological
• Technological
• Legal
• Environmental.

Categories are useful because they help you break the risks up a bit so you can think them through in a more structured way, and because it may help determine who should be responsible for managing them or even providing funds for that management.

You can use Risk Categories containing common risks listed under each category, shown as a Risk Checklist which is the first of the risk techniques I will describe:

The PRINCE2 Risk Checklist

Commercial risk checklists can be very helpful, but a tailored list of headings and risks that are more precisely relevant to your own organization is more valuable still.

At the beginning of each project, after doing other risk identification activities, you can use your Risk Checklist as a safety net to see whether you missed any category of risk.

Risk specialists suggest you do not use Risk Checklists first, as you are likely to zone in on the category shown and miss potential risks. So use it after brainstorming to catch any risk areas that were not thought of:

If you have a Project Office that provides admin effort to support the organizations projects, then that is a good place to keep and organizational risk checklist. This should be constantly updated and should form part of the Lessons Learned emanating at any point from current projects.

In other words, if any of the project staff identify a new risk that might affect other projects, staff must ask the project office to add it to the list so that all future projects considered during planning. In this manner, the Risk Checklist is tools kept up to date, relevant, and extremely useful with a very small overhead required to keep it maintained.

Identifying Risk Causes, Events and Effects

For each risk, it is helpful to break it into three parts, however, they often use different approaches and use different names for this – but the PRINCE2 method uses:

• Cause
• Event (the risk itself
• Effect

Although you can simply a list these for each risk, another option is to use a diagram with a different shape symbol for the cause, event and effect.

Be aware that a cause may trigger more than one risk. In addition, you can also show chain reactions and risks with the effect of one risk is a cause of another, and the effect of that sets off yet another risk. Another aspect to consider, where drawing a diagram like the one above can be helpful, is when you must consider not only the effect of each risk if it happens on its own, but also combined effects if more than one risk happens at the same time.

This technique is powerful when running a risk workshop to help identify risks. Using a whiteboard for example, you could not only identify risks but also show series and parallel chain reactions as discussed above. This type of detail could not be fleshed out by merely capturing the description of each risk in isolation.

You will remember that PRINCE2 categorizes risks as both threats and opportunities, and again using diagrams like the one above, you could identify strategies that offset threats with opportunities. This identification and analysis should be included within the Risk Management Approach document forming part of the Project Initiation Documentation (PID), developed during the PRINCE2 process Initiating a Project.

PRINCE2 Masterclass

Fully compliant with the current PRINCE2 2023 Syllabus

5.0

Your Route To PRINCE2 Practitioner

Prepare for your PRINCE2 Foundation and Practitioner Exams with our famous on-line course with streaming HD Video Lessons, study guides and mock exams. In the last fifteen years we have had 6,000+ Academy students successfully transform their careers as PRINCE2 Practitioners.

• Bite Sized Lessons  The sheer size of PRINCE2 can be daunting. The Masterclass will guide you through the syllabus in easy to consume bite sized lessons
• Be prepared and confident for the exams  Test your knowledge in a fun, entertaining environment with the PRINCE2 Foundation & practitioner exam revision tools
• Enjoy yourself!  This PRINCE2 Foundation & Practitioner online course is broken into bite-size lessons, combining leading edge multimedia and interactive exercises for optimum enjoyment and knowledge retention
• Feel confident with full tutorial support  Benefit from fast access to experienced, one-to-one learning support as you study via email and phone, so there is no need to feel isolated while you are learning
• Take your time  Study at your own pace by bookmarking your progress and picking up where you left off at a speed that suits you