Risk Impact in PRINCE2 7 refers to the estimated effect that a risk would have on project objectives if the risk were to materialise. It is a fundamental component of risk assessment and works alongside probability to determine the overall severity of identified risks.
In PRINCE2 7, impact is typi…Risk Impact in PRINCE2 7 refers to the estimated effect that a risk would have on project objectives if the risk were to materialise. It is a fundamental component of risk assessment and works alongside probability to determine the overall severity of identified risks.
In PRINCE2 7, impact is typically assessed against several project objectives including time, cost, quality, scope, and benefits. Each risk is evaluated to understand how significantly it could affect these areas if it occurred. The impact assessment helps project teams understand the potential consequences and prioritise their risk response efforts accordingly.
Impact is usually measured using a defined scale, commonly ranging from very low to very high, or using numerical values such as 1 to 5. This standardised approach ensures consistency when comparing different risks across the project. For example, a very high impact might represent a situation where the project would fail to deliver its primary objectives, while a low impact might indicate minor inconveniences that can be easily absorbed.
When combined with probability assessment, impact helps calculate the overall risk exposure or expected value. This combination forms the basis of risk prioritisation, often visualised through a probability-impact grid or matrix. Risks with high probability and high impact require urgent attention and robust responses, while those with low scores in both areas may simply need monitoring.
The Risk Practice in PRINCE2 7 emphasises that impact assessment should be realistic and based on available evidence. Project managers should consider both the primary effects and any secondary consequences that might cascade from an initial risk event. Understanding impact helps inform decisions about which risks to treat, tolerate, transfer, or avoid, ensuring that limited resources are focused on the most significant threats and opportunities facing the project.
Risk Impact in PRINCE2 Foundation v7
Why Risk Impact is Important
Understanding risk impact is essential for effective project management because it helps project teams prioritize which risks require the most attention and resources. Not all risks are equal - some could cause minor inconveniences while others could derail an entire project. By assessing impact, project managers can make informed decisions about where to focus their risk management efforts and ensure the project delivers its intended benefits.
What is Risk Impact?
Risk impact refers to the effect or consequence that a risk would have on the project if it were to occur. In PRINCE2, impact is one of two key components used to evaluate risks, the other being probability (likelihood of occurrence).
Impact is typically assessed against the project's objectives, including: - Time: How much could the schedule be affected? - Cost: What financial consequences could result? - Quality: How might deliverables be compromised? - Scope: Could the project's outputs be reduced? - Benefits: How might the expected benefits be affected?
How Risk Impact Works
In PRINCE2, risk impact is typically measured using a scale, commonly ranging from Very Low to Very High, or using numerical values (1-5). The organization should define what each level means in concrete terms.
For example: - Very Low (1): Minimal effect on objectives - Low (2): Minor effect, easily absorbed - Medium (3): Noticeable effect requiring management attention - High (4): Significant effect on one or more objectives - Very High (5): Severe effect that could threaten project viability
Impact is combined with probability to calculate the expected value or severity of a risk, often displayed on a Probability-Impact Grid (also known as a risk matrix). This helps determine which risks need urgent attention.
Assessing Risk Impact
When assessing impact, consider: - The specific project tolerances that have been set - Which objectives would be affected and to what degree - Whether the impact could trigger an exception situation - The cumulative effect if multiple risks materialize
Exam Tips: Answering Questions on Risk Impact
1. Remember the distinction: Impact is about the consequence or effect if a risk occurs, while probability is about the likelihood of it occurring. Questions may test whether you can differentiate between these two concepts.
2. Know the relationship: Risk severity or expected value is calculated by combining impact and probability. A high-impact, low-probability risk may require different treatment than a low-impact, high-probability risk.
3. Connect to objectives: Impact should always be assessed against project objectives (time, cost, quality, scope, benefits). If a question asks how to assess impact, think about which objectives would be affected.
4. Understand the scales: Be familiar with how impact scales work (Very Low to Very High or numerical scales). Questions may present scenarios asking you to identify the appropriate impact level.
5. Link to tolerances: Remember that impact assessment relates to project tolerances. A risk that would breach tolerances has a higher relative impact.
6. Practice scenario questions: When given a scenario, identify the potential consequences first, then determine which category of impact applies based on severity.
7. Remember it applies to both threats and opportunities: Impact assessment is used for both negative risks (threats) and positive risks (opportunities). Opportunities have positive impacts that could enhance objectives.