In the context of PRINCE2 7, effective risk management relies on distinguishing between the sources of uncertainty and the impact of that uncertainty. To ensure clarity and avoid ambiguity, PRINCE2 recommends describing a risk using three specific components: the Cause, the Event, and the Effect.
…In the context of PRINCE2 7, effective risk management relies on distinguishing between the sources of uncertainty and the impact of that uncertainty. To ensure clarity and avoid ambiguity, PRINCE2 recommends describing a risk using three specific components: the Cause, the Event, and the Effect.
1. Risk Cause: This is the source of the risk. Crucially, the cause is a fact, an existing situation, or a constraint that is currently true. It is not uncertain; it is the context that gives rise to the risk. For example, 'The project relies on a third-party supplier for the database migration' is a cause because it is a known reality of the project setup.
2. Risk Event: This describes the area of uncertainty. It is the specific occurrence that might or might not happen as a result of the cause. This is the probabilistic element. Continuing the example, the event might be, 'The supplier may fail to meet the agreed delivery deadline.'
3. Risk Effect: This is the impact on the project’s objectives (such as time, cost, quality, scope, benefits, or sustainability) if the risk event actually occurs. It quantifies the consequence. For instance, 'The project go-live date is delayed by two weeks, incurring penalty costs.'
By structuring risk descriptions using the format 'Due to [Cause], there is a risk that [Event] occurs, which would result in [Effect],' practitioners can identify the most appropriate risk responses. This separation allows the project management team to decide whether to target the root cause (prevention), reduce the probability of the event, or mitigate the severity of the effect.
Mastering Risk Cause, Event, and Effect in PRINCE2 Practitioner v7
Introduction to the Concept In PRINCE2, vague risk descriptions are a common cause of project failure. To manage risks effectively, they must be communicated clearly and unambiguously. PRINCE2 recommends a specific structure to define risks: the Cause, the Event, and the Effect. This structure ensures that the Project Board and Project Manager distinguish between facts, uncertainties, and impacts.
The Three Components 1. Risk Cause (The Source): This describes the source of the risk. A cause is usually a definite fact or an existing situation that gives rise to the risk. It is not uncertain; it is already true. Example: 'Because the team is using a new coding language...'
2. Risk Event (The Uncertainty): This is the actual risk description. It is the uncertain event that may or may not occur. This implies probability. Example: '...there is a risk that the coding will take longer than planned...'
3. Risk Effect (The Impact): This describes the impact on the project objectives (Time, Cost, Quality, Scope, Benefits, or Sustainability) if the risk event materializes. Example: '...resulting in a delay to the stage completion date.'
How it Works: The Structure When writing or analyzing a risk in the Risk Register, use the following sentence structure to validate logic: 'Due to [Cause], there is a risk that [Event], resulting in [Effect].'
Why is this Important? Distinguishing these three elements is vital for selecting the correct Risk Response. If you mistake a Cause (a fact) for a Risk, you might try to 'avoid' something that has already happened (which is impossible). If you mistake an Effect for a Risk, you focus on the symptom rather than the root cause.
Exam Tips: Answering Questions on Risk Cause, Event, and Effect In the PRINCE2 Practitioner exam, you will often face questions where you must critique entries in a Risk Register based on a given Scenario.
1. Differentiate between Issues and Risks: If a statement describes something that has already happened or is inevitable, it is a Cause or an Issue, not a Risk Event. Risks must always be uncertain.
2. Check the Syntax: Look for the 'Cause -> Event -> Effect' flow. A common exam trap is a statement that lists a Cause and an Effect but misses the Event (the uncertainty).
3. Validate the Effect: The Effect must impact a project objective. If the statement says 'resulting in the team being annoyed,' this is not a formal project impact unless it affects motivation and subsequently delivery time or quality.
4. Analyze the 'Cause': Ensure the cause is grounded in the Scenario or Additional Information provided in the exam. If the cause is 'Because the supplier is bankrupt,' check the scenario to see if the supplier is actually bankrupt (Fact/Cause) or if it is just a rumor (Uncertainty/Event).
5. Summary Formula: Cause = Fact (Present) Event = Uncertainty (Future) Effect = Impact on Objectives (Conditional Future)