In PRINCE2 7, threats are one of the two main types of risk that project managers must address, the other being opportunities. A threat is defined as an uncertain event that, if it occurs, would have a negative impact on the achievement of project objectives. Understanding and managing threats is fâŚIn PRINCE2 7, threats are one of the two main types of risk that project managers must address, the other being opportunities. A threat is defined as an uncertain event that, if it occurs, would have a negative impact on the achievement of project objectives. Understanding and managing threats is fundamental to successful project delivery within the PRINCE2 framework.
Threats can affect various aspects of a project including time, cost, quality, scope, benefits, and reputation. They arise from internal sources such as resource constraints, technical challenges, or team capability gaps, as well as external sources including market changes, regulatory requirements, supplier issues, or environmental factors.
PRINCE2 7 provides several response strategies for managing threats. The first is Avoid, which involves taking action to eliminate the threat entirely by changing the project plan or approach. The second is Reduce, where actions are taken to decrease either the probability of the threat occurring or its potential impact. The third is Transfer, which shifts responsibility for the threat to a third party, often through insurance or contractual arrangements with suppliers. The fourth is Accept, where the project acknowledges the threat but decides not to take proactive action, typically because the cost of response outweighs potential impact. The fifth is Share, where responsibility for managing the threat is distributed between multiple parties.
Effective threat management requires ongoing identification, assessment, and monitoring throughout the project lifecycle. The Risk Register serves as the primary tool for documenting threats, their potential impacts, probability assessments, and planned responses. Regular risk reviews ensure that new threats are captured and existing ones are reassessed as project circumstances evolve.
Project Managers must balance the cost of threat responses against potential negative consequences, ensuring resources are allocated appropriately to protect project objectives while maintaining overall project viability and stakeholder confidence.
Threats in Risk Management - PRINCE2 Foundation V7 Guide
What are Threats in Risk Management?
In PRINCE2, a threat is defined as an uncertain event that, if it occurs, will have a negative impact on the project's objectives. Threats are one of two types of risks identified in PRINCE2 risk management - the other being opportunities (positive risks). Threats can affect any aspect of the project including time, cost, quality, scope, and benefits.
Why is Understanding Threats Important?
Understanding threats is crucial because: - Projects operate in uncertain environments where things can go wrong - Proactive threat management prevents issues from derailing projects - It allows project teams to allocate contingency reserves appropriately - Effective threat management increases stakeholder confidence - It supports better decision-making by the Project Board
How Threat Management Works in PRINCE2
PRINCE2 provides five response strategies for managing threats, remembered by the acronym RAFTA:
1. Reduce - Take actions to decrease the probability of the threat occurring or lessen its impact if it does occur. This is the most common response.
2. Avoid - Change the project plan to eliminate the threat entirely or protect objectives from its impact.
3. Fallback - Prepare contingency plans to be implemented if the threat materializes. This accepts the threat but has a backup plan ready.
4. Transfer - Pass the risk to a third party better able to manage it, such as through insurance or contractual arrangements. Note that transferring a threat does not eliminate it from the project.
5. Accept - Acknowledge the threat exists but take no proactive action. This is appropriate for low-impact, low-probability threats where response costs outweigh benefits.
The Risk Management Procedure for Threats
Threats are managed through the PRINCE2 risk management procedure: - Identify - Recognize potential threats using techniques like brainstorming and checklists - Assess - Evaluate probability and impact to prioritize threats - Plan - Select appropriate response strategies - Implement - Execute the planned responses - Communicate - Keep stakeholders informed throughout
Key Roles in Threat Management
- Risk Owner - Responsible for managing and monitoring the threat - Risk Actionee - Carries out specific risk response actions - Project Manager - Maintains the Risk Register and ensures threats are managed - Project Board - Makes decisions on threats outside tolerance
Exam Tips: Answering Questions on Threats in Risk Management
1. Memorize the five threat responses (RAFTA) - Questions frequently ask you to identify the correct response for a given scenario.
2. Distinguish between similar responses: - Avoid eliminates the threat; Reduce lessens it - Transfer shifts ownership; Accept retains ownership with no action - Fallback prepares for when a threat occurs; Reduce tries to prevent it
3. Watch for keywords in scenarios: - 'Insurance' or 'contract' typically indicates Transfer - 'Change the approach' or 'different method' suggests Avoid - 'Contingency plan' or 'backup' points to Fallback - 'No action taken' or 'low priority' indicates Accept
4. Remember that threats have negative impacts - If a question describes a positive uncertain event, it is an opportunity, not a threat.
5. Understand residual and secondary risks - After applying a response, residual risk may remain, and new secondary risks may emerge.
6. Know the Risk Register contents - Threats are recorded in the Risk Register along with their probability, impact, proximity, response, owner, and status.
7. Connect threats to tolerances - When threats exceed agreed tolerances, escalation to the Project Board is required.