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Risk Management

What is Risk Management?

Risk Management can be defined as the systematic application of management policies, procedures and practices to the tasks of establishing the context, identifying, analysing, planning and managing risk in a way that will enable organisations to minimise threats and maximise opportunities in a cost-effective way.

For the purpose of this guidance the definition of a risk is the combination of the probability of an event occurring and its consequences on objectives.

It allows an informed judgement on the degree of risk in project and programme proposals, and provides confirmation of the balance struck to achieve value for money among:

performance
whole life cost
timescale
risk.

Its application throughout the life of a project or programme makes an essential contribution to delivering on time and to cost, outputs that meet the performance objectives and offer value for money.

At the programme level, risk is considered with regard to the ability to achieve the planned outcomes and benefits for a specific capability area.

At the project level, risk is considered with regard to the delivery of the project’s outputs to meet the required objectives on time, cost, performance, benefits, quality and scope.

Programme Risk Management

A Programme Support Function (PSF) supports the Senior Responsible Owner (SRO) by determining the Risk Management of all the projects within a capability programme.

The PSF is responsible for analysing risks to each project, and carrying out Risk Management at the programme level. All Defence Lines of Development will be addressed.

Working under the direction of the Programme Board to implement Risk Management, the PSF:

Will develop appropriate Risk Management standards for the programme e.g. Programme Risk Management Strategy & Programme Risk and Opportunity Management Plan.
Will conduct Risk Management at the programme level e.g. identify, analyse, plan & manage.
Will develop and maintain the programme’s Risk Register.
Will analyse project risks to collate risk and opportunity information that adds value at the programme level.
Will proactively review risks across projects to seek out those that should be managed by the programme rather than by individual projects, including systemic risks.
Will provide recommendations to escalate or cascade risks as necessary.
Will identify risks to stakeholders, benefits, delivery, dependencies, interdependencies and external suppliers.
May facilitate risk workshops to ensure consistent application of risk processes throughout the programme.

How is project Risk Management affected by the existence of the programme?

Conducting Risk Management within a project will remain largely unchanged, with day-to-day activities being affected very little.

However, a project will need to align some aspects of its Risk Management implementation in accordance with Programme Board direction. This will be through the use of a standardised risk strategy, process and templates for monitoring and reporting risks.

The project will be required to report risks to both the Programme Board, via the PSF, and the Directorate Operating Centre.

These additional requirements should be reconciled with a project’s existing implementation and should be reflected in revisions to the Risk Management Strategy, and Risk & Opportunity Management Plan, as appropriate.

The approach to reporting key risks, and escalating risks for action, remains much the same.

Escalating risks requires careful treatment as a risk can usually be escalated only in one direction to one owner above the project. A risk that is escalated via one chain should normally be reported to the other for information.

The project can reasonably expect supportive feedback from both the PSF and the Directorate Operating Centre.

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