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Risk (Risk Identification (Decisions affecting and included in the Risk…
Risk
Risk Identification
the primary goal of the 'identify context' step is to obtain information about the project in order to understand the specific objectives that are at risk and to formulate the Risk Management Strategy for the project
the Risk Management Strategy describes how risks will be managed during the project it is created during the initiation stage and then reviewed and possibly updated at the end stage
The project Risk Management strategy should be based on the corporate risk management policy or on the programme Risk Management Strategy.
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Early warning indicators
Early warning indicators (relevant to the project ) will provide advanced warning that one or more of the project's objectives could be at risk
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An effective way of identifying risks is to use a risk workshop. This is a group session designed to identify threats and opportunities
Cause event and effect
An important aspect of identifying risk is being able to provide a clear and unambiguous expression of each one
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Risk Planning
The primary goal of the 'plan' step is to prepare specific management responses to the threats and opportunity identified, ideally to remove or reduce the reduce the threats and to maximize the opportunities
attention to the plan step ensures as far as possible that the project is not taken by surprise if a risk materializes
The plan step involves identifying and evaluating a range of options for responding to threats and opportunities
Risk responses do not necessarily remove the inherent risk in its entirety, leaving Residual Risk :star:
In some cases, implementing a risk response will reduce or remove other related risks
This is turn may lead to secondary risks, i.e. risks that may occur as a result of invoking a risk response
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Communicate
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The "communicate' step should ensure that information related to the threats and opportunities faced by the project is communicated both within the project and externally to stakeholders
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Care should be taken in using these reports to communicate risks with external stakeholders and reference should be made to the Communication Management Strategy for the most appropriate method
There are various other communication method s that can be considered alongside the PRINCE2 management products, for exmaple
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These aspects of communication in particular should be recognized and addressed if project risk management is to be effective
A project exposure to risk is never static: effective communication is key to the identification of new risks or changes in existing risks
Effective risk management is dependent on participation and , in turn participation dependent on effective communication
Risk budget
A risk budget, if used , is a sum of money included within the project budget and set aside to fund specific management responses to the project's threats and opportunities
Inorder to arrive at a risk budget for the project a financial approach to risk management is needed
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As the risk budget is part of the project budget , there may be tendency to treat it as just another sum of money that the project manager can spend. this culture should be discouraged in favor of the risk management strategy defining the mechanisms for control of, and access to, this budget
It is usually best to set the risk budget to cover the know risks ( as identified and to make a provision for unknown risks (yet to be identified)
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Purpose
The purpose of the risk theme is to identify assess and control uncertainty and, as a result improve the ability of the the project
It is not possible to completely avoid taking risks in projects because projects enable change and change brings uncertainty and risk
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Risk assessment
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The primary goal of the 'estimate' step to assess the threats and the opportunities to the project in terms of their probability and impact
The risk proximity will also be of interest to gauge how quickly the risk is likely to materialize if no action were taken
Summary of Risk
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A useful way of summarizing the set of risks and their estimations is to plot them onto a summary risk profile
Evaluate
The primary goal of the "Evaluate''step is to assess the net effect of all the identified threats and opportunities on a project when aggregated together
This enables an assessment to be made of the overall severity of the risks facing the project, to determine whether this level of risk is within the risk tolerance set by the project board and whether the project has continued business justification
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