In PRINCE2 7, the Risk Practice identifies several response types for managing threats, which are risks that could negatively impact project objectives. Understanding these response types is essential for effective risk management.
**Avoid** - This response eliminates the threat by changing the pr…In PRINCE2 7, the Risk Practice identifies several response types for managing threats, which are risks that could negatively impact project objectives. Understanding these response types is essential for effective risk management.
**Avoid** - This response eliminates the threat by changing the project plan or approach. By modifying scope, timeline, or methodology, the project team ensures the risk cannot materialise. For example, selecting a proven technology instead of an untested one removes associated technical risks.
**Reduce** - This involves taking proactive actions to decrease either the probability of the threat occurring or its potential impact. Mitigation strategies might include additional testing, training team members, or implementing quality controls. The goal is to make the risk more manageable rather than eliminating it entirely.
**Transfer** - This response shifts the financial or management burden of the threat to a third party. Common methods include purchasing insurance, outsourcing specific activities, or including penalty clauses in contracts with suppliers. While responsibility transfers, the project retains accountability for monitoring.
**Share** - Similar to transfer, sharing involves distributing the risk between parties. This is often used in partnerships or joint ventures where both parties accept portions of potential negative consequences. Each party manages their allocated share of the threat.
**Accept** - Sometimes the cost of responding exceeds potential impact, or no practical response exists. In such cases, the project consciously acknowledges the threat and prepares contingency plans if it occurs. This can be active acceptance with contingency reserves or passive acceptance with no specific action.
**Prepare contingent plans** - This involves creating response plans that are only activated if the threat occurs, ensuring readiness while not consuming resources prematurely.
Selecting appropriate response types requires analysing cost-effectiveness, feasibility, and alignment with project objectives. The Risk Owner is responsible for implementing and monitoring chosen responses throughout the project lifecycle.
Risk Response Types for Threats - PRINCE2 Foundation V7
Why is This Important?
Understanding risk response types for threats is essential for any PRINCE2 practitioner because projects inevitably face potential problems that could derail objectives. Knowing how to respond appropriately to threats ensures that project managers can protect the project's success, time, cost, and quality targets. This topic is frequently tested in the PRINCE2 Foundation exam as it forms a core part of the Risk practice.
What Are Risk Response Types for Threats?
In PRINCE2 V7, threats are uncertain events that would have a negative impact on project objectives if they occur. There are five main response types for dealing with threats:
1. Avoid This response involves taking action to eliminate the threat entirely by changing some aspect of the project. For example, you might change the project scope, approach, or timeline to ensure the threat cannot occur. This is often the preferred option when the threat is severe and the cost of avoidance is acceptable.
2. Reduce This response aims to decrease either the probability of the threat occurring or its impact if it does occur, or both. Actions are taken to make the threat less likely or less damaging. This is the most common response type used in projects.
3. Transfer This involves passing the financial impact or management responsibility of the threat to a third party. Common examples include insurance policies, penalty clauses in contracts, or outsourcing risky work to specialists. Note that the threat itself does not disappear; the responsibility for managing it shifts.
4. Accept Sometimes it is appropriate to acknowledge the threat but take no proactive action. This may be because the cost of responding outweighs the potential impact, or because no practical response exists. Acceptance can be active (with contingency plans prepared) or passive (simply acknowledging the risk).
5. Share This response involves distributing the risk between parties, often through partnerships or joint ventures. Both parties share the potential negative consequences proportionally. This differs from transfer, where the entire responsibility moves to another party.
How It Works in Practice
When a threat is identified, the project team assesses its probability and impact. Based on this assessment, the most appropriate response is selected. The chosen response is documented in the Risk Register along with any planned actions, owners, and deadlines. The effectiveness of responses is monitored throughout the project lifecycle, and responses may be adjusted as circumstances change.
Exam Tips: Answering Questions on Risk Response Types for Threats
Tip 1: Memorize the five responses Remember the acronym AARTS - Avoid, Accept, Reduce, Transfer, Share. This helps you quickly recall all options during the exam.
Tip 2: Focus on keywords in scenarios Look for clues in the question: mentions of insurance or contracts point to Transfer; changing the plan suggests Avoid; reducing likelihood indicates Reduce; doing nothing or acknowledging suggests Accept; partnerships indicate Share.
Tip 3: Distinguish between Transfer and Share Transfer moves the entire responsibility to another party, while Share distributes it between parties. Exam questions often test whether you understand this distinction.
Tip 4: Remember that Accept is not always negative Accepting a risk can be a valid and appropriate response when other options are too costly or impractical. Do not assume it represents poor risk management.
Tip 5: Consider cost-benefit When evaluating scenario-based questions, think about whether the proposed response makes practical sense. The cost of the response should not exceed the potential impact of the threat.
Tip 6: Read scenarios carefully Exam questions may describe a situation and ask you to identify which response type is being used. Pay close attention to what actions are being taken rather than what the question says the response is called.