Risk Theme

Question 1

What is the definition of risk, and what are the two types?

Answer 1

An uncertain event that, should it occur, will have an effect in the achievement of objectives.
It consists of the probability of a perceived threat or opportunity occurring, and the magnitude of its impact on objectives.
A risk can be a threat or opportunity.

Question 2

What is risk management?

Answer 2

The systematic application of procedures to the tasks of identifying and assessing risks, and then planning and implementing risk responses

Question 3

What needs to be done with risk, for risk management to work effectively? (4)

Answer 3

1. Identified
2. Assessed
3. Planned for
4. Controlled (by making sure responses are implemented and monitored)

Question 4

Prince2 is based on which nine generic risk principles?

Answer 4

1. Understanding the project context
2. Involve the stakeholders
3. Establishing clear project objectives
4. Developing a project risk management approach
5. Reporting on risks regularly
6. Defining clear roles and responsibilities
7. Establishing a support structure and supportive culture for risk management
8. Monitoring for early warning indicators
9. Establishing a review cycle and seek continual improvement

Question 5

What’s the minimum a Prince2 project must do under risk management?

Answer 5

1. Define the risk management approach (identify and assess risks, assign roles and responsibilities, maintain a risk register and use lessons to inform risk identification and management)
2. Have two products - the risk management approach and the risk register.
   Both these products are created during initiating a project.

Question 6

What should a risk management approach be based on?

Answer 6

An organization’s risk management policy or a program risk management (if available)
lessons from previous projects

Question 7

What should the risk register contain? (6)

Answer 7

1. A risk identifier
2. A risk author (the person who raised the risk)
3. The date registered
4. A risk category
5. A risk description
6. The probability, impact and expected value of the risk

It should also contain the risk’s proximity (how close to the present time it is expected to occur)

Question 8

What are the five steps Prince2 recommends as a risk management procedure?

Answer 8

1. Identify
2. Assess
3. Plan
4. Implement
5. Communicate (runs in parallel to all others)

Question 9

What are some of the techniques that can be used to identify risks?

Answer 9

• Review lessons
• Risk checklists
• Risk prompt lists
• Brainstorming
• Risk breakdown structures

Question 10

It is important to express a risk in terms of its cause and the event. What does that mean?

Answer 10

The cause - the situation that gives rise to the risk

The event - the threat that may occur and its effect

Question 11

What is a Probability Impact Grid?

Answer 11

Under the Risk Theme
Risks are placed on the grid with ranking values, e.g. measure of probability, impact scale.
This allows to prioritize time and effort

Question 12

What are secondary risks?

Answer 12

Risks that relate to a new situation after a risk response has been implemented

Question 13

What six responses does Prince2 suggest for threats and opportunities?

Answer 13

Common

1. Prepare contingent plans
2. Accept (to live with the risk)
3. Share (e.g. through a contract)
4. Transfer (to a third party, e.g. through a contract)

For threats:

5. Avoid
6. reduce

For opportunities:

5. Exploit (take action to realize opportunity)
6. Enhance (take action to make opportunity more likely to happen or increase impact)

Question 14

To manage risks, what two roles need to be assigned?

Answer 14

1. Risk owner (responsible for management, monitoring and controlling all aspects of a risk)
2. Risk actionee (Assigned to carry out risk response actions, upon direction of the risk owner)

Question 15

Through which products can risks be communicated? (5)

Answer 15

1. Checkpoint reports
2. Highlight reports
3. End stage reports
4. End project reports
5. Exception reports

Question 16

What is a risk budget?

Answer 16

The money required for risk mitigation activities. This is part of the project budget

Question 17

How are the different roles related to risk management? (8)

Answer 17

1. Corporate or Programme Management: Provide corporate risk management policy and risk management process guide
2. Executive: accountable for overall risk management, esp. that risk management approach exists
3. Senior User: ensures risks to the users are identified, assessed and controlled
4. Senior Supplier: ensures risks relating to supplier aspects are identified, assessed and controlled
5. Project Manager: create risk management approach and maintain risk register
6. Project Support: assist with maintenance of risk register
7. Team Manager: participate in identification, assessment and control of risks
8. Assurance: review risk management practices to ensure they are performed in line with the risk management approach

Question 18

What are the two different types of risk status?

Answer 18

Active or closed