This will be part of a risk management process.
This process is covered in much more detail in the 'The Complete Risk Management package'
It is also covered as part of the PRINCE2® methodology under the component 'Management of Risk'.
All possible risks to the smooth running of the project should be identified.
This should be done at all levels of the project.
Naturally, committees like the Project Board will identify risks at a higher level, such as, the change in future exchange rates or interest rates.
In addition, managers at all levels must identify potential issue within their own remits, for example, a supplier going bust, changes in regulatory issues, delays in the delivery of critical equipment.
For each risk the impact on the project must be assessed.
This will be a mixture of the likelihood of the risk occurring and the level of the affect (that is the impact) on the project.
We know that if a risk will have a dramatic affect, for example and earthquake, it may be very unlikely to occur and as such could be ignored.
On the other hand it may be very likely to occur, for example exchange rate movement, but may be assessed as having only a minor affect.
The project management team may only be interested in high likelihood / high affect risks.
For these the project management team must make sure that suitable contingency plans are in place.
These must be costed and allowed for in the budget.
All risks raised must be recorded along with any actions decided.
Those responsible for implementing actions should be identified and recorded.
The progress of any existing risk issues must be addressed at suitable review points.
If you use any particular methods for assessing the risks or any assumptions etc these should also be recorded.
Risks are recorded within PRINCE2 2005 using the Risk Log and within PRINCE2 2009 [see ‘The Complete Project Management plus PRINCE2’] as the Risk Register.
Templates are provided in the product package.
PRINCE2® is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries.