In PRINCE2 7, understanding Risk Cause, Event and Effect is fundamental to effective risk management. This three-part structure helps project teams identify, analyse and respond to risks systematically.
Risk Cause refers to the source or origin of a risk. It describes the existing condition or sit…In PRINCE2 7, understanding Risk Cause, Event and Effect is fundamental to effective risk management. This three-part structure helps project teams identify, analyse and respond to risks systematically.
Risk Cause refers to the source or origin of a risk. It describes the existing condition or situation that creates the potential for something to happen. Causes are typically circumstances that already exist within or outside the project environment. For example, a cause might be that team members lack experience with a particular technology, or that a key supplier has financial difficulties.
Risk Event is the uncertain occurrence itself - something that may or may not happen. It is the actual incident or situation that could materialise if the cause triggers it. Events are expressed as possibilities rather than certainties. Using the previous examples, the event might be that the team makes significant errors during implementation, or that the supplier fails to deliver critical components on time.
Risk Effect describes the impact or consequence on project objectives if the event occurs. Effects can be positive (opportunities) or negative (threats) and typically relate to time, cost, quality, scope, benefits or other project parameters. The effect of team errors might be project delays and increased costs for rework, while supplier failure might result in schedule slippage and potential contract penalties.
PRINCE2 7 recommends documenting risks using a structured format that captures all three elements: 'Because of [cause], there is a risk that [event] may occur, which would result in [effect].' This approach ensures clarity and enables appropriate risk responses to be developed.
Understanding this relationship helps teams address risks at their source through preventive actions, prepare responses for potential events, and plan contingencies for managing effects should risks materialise.
Risk Cause, Event and Effect in PRINCE2 Foundation V7
Why is Risk Cause, Event and Effect Important?
Understanding the relationship between risk cause, event, and effect is fundamental to effective risk management in PRINCE2. This structured approach ensures that project teams can accurately identify, assess, and respond to risks. By breaking down risks into these three components, teams can target their responses more effectively, addressing root causes rather than just symptoms, and preparing for potential consequences.
What is Risk Cause, Event and Effect?
In PRINCE2, every risk should be described using three distinct elements:
Cause: The source or condition that gives rise to the risk. This is the underlying reason why a risk might occur. Causes are often existing conditions or situations within or outside the project environment.
Event: The uncertain occurrence or situation that, if it happens, will affect the project objectives. This is the risk itself - the thing that may or may not happen.
Effect: The impact or consequence on the project objectives if the risk event occurs. Effects can be positive (opportunities) or negative (threats).
How Does It Work?
The cause-event-effect model works as a chain:
1. A cause exists (a condition or situation) 2. This cause may lead to an event occurring (the uncertainty) 3. If the event occurs, it produces an effect on project objectives (the impact)
Example: Cause: The supplier has limited experience with our required technology Event: The supplier may deliver components that do not meet specifications Effect: This could result in project delays and increased costs for rework
This structure helps teams determine where to focus their risk responses - they might address the cause (change supplier), prepare for the event (increase quality checks), or mitigate the effect (build contingency time into the schedule).
Exam Tips: Answering Questions on Risk Cause, Event and Effect
1. Identify the uncertainty: The event is always the uncertain element. Look for words like 'may', 'might', or 'could' to identify the event.
2. Causes are existing conditions: Causes are typically facts or current situations that already exist. They are not uncertain - they are known.
3. Effects relate to objectives: Effects always describe impact on project objectives such as time, cost, quality, scope, benefits, or risk.
4. Follow the logical sequence: When analyzing a risk statement, ask yourself: What condition exists? What uncertain thing might happen? What would be the consequence?
5. Watch for common exam traps: Questions may present risk descriptions with elements in the wrong order or missing components. Practice identifying each element separately.
6. Use the 'because... may... resulting in' format: A well-structured risk statement reads: Because of [cause], [event] may occur, resulting in [effect].
7. Remember both threats and opportunities: Effects can be negative (threats) or positive (opportunities). The same structure applies to both.
8. Practice with examples: Before the exam, practice breaking down various risk scenarios into their cause, event, and effect components to build confidence and speed.