RISK MANAGEMENT

Risk Management

Risk Management

Introduction

Risk - a corner stone of every business, the unfortunate flip side of the "reward". Every day - every business owner, manager, and executive struggles with making the right decision and minimizing risk. This paper provides a baseline model for understanding general business risk and establishing a Risk Management function within the business enterprise.

There are many definitions of risks. For the purpose of this article, risk is defined as the probability of an event occurrence that may impact the business finances, operations, product line, or customer base. It is important to remember that risk by itself is not bad. Risk in fact is essential to progress and growth of the enterprise. The essential part for management and owners is to control and manage the risk to a degree that it minimizes the exposure to the business enterprise.

Risk Management is defined as a business practice with processes, methods, and tools for managing risk within an organization. It provides a disciplined environment for proactive decision-making to, (a) assess continuously what risks are present during the course of business, (b) determine what risks need immediate attention, (c) implement strategies to mitigate these risks, and (d) create and implement contingency plans when necessary.

Prince2

PRojects IN Controlled Environments (PRINCE) is a project management method. It covers the management, control and organisation of a project. "PRINCE2" refers to the second major version of this method and is a registered trademark of the Office of Government Commerce (OGC), an independent office of HM Treasury of the United Kingdom.

PRINCE2 is derived from an earlier method called PROMPT, and from PRINCE project management method, which was initially developed in 1989 by the Central Computer and Telecommunications Agency (CCTA) as a UK Government standard for information systems (IT) project management; however, it soon became regularly applied outside the purely IT environment. PRINCE2 was released in 1996 as a generic project management method. PRINCE2 has become increasingly popular and is now a de facto standard for project management in the UK. Its use has spread beyond the UK to more than 50 other countries.

The most current revision was released in 2009 as part of the Prince2:2009 refresh project by the Office of Government Commerce.

PRINCE2:2009 Refresh: Since 2006, the method has been revised and launched as "PRINCE2:2009 Refresh" on June 16th, 2009. The name "PRINCE2" (instead of "PRINCE3" or similar) is kept to demonstrate that the method remains faithful to its principles. Nevertheless, it is a fundamental revision of the method from 1996 to adapt it to the changed business environment, to make the method simpler and "lighter", to address current weaknesses or misunderstandings, and to better integrate it with other OGC methods (ITIL, P3O, P3M3, MSP, M_o_R etc.). The main difference between the 2009 version and earlier versions is that there will be two manuals: 'Managing Successful Projects with PRINCE2 - 2009 Edition' and 'Directing Successful Projects with PRINCE2 - 2009 Edition'. Both the Foundation and Practitioner Examinations will be based on the new 'Managing Projects' manual and will ...