In a previous article covering PRINCE2 risk responses, I reminded you that in PRINCE2, risks can be either positive or negative.
The traditional negative risk type is referred to as a threat.
The positive risk type is referred to as an opportunity.
To help remember the six risk action types for negative threats, use the acronym AS RAFT as the first letter of each action type, namely:
To help remember the four risk action types for positive opportunities, use the acronym SEER as the first letter of each action type. Remember that the Share response is used for both positive and negative risk types:
So, now all you have to do is to remember what the letters of those acronyms stand for!
Many PRINCE2 Practitioner exam candidates get this wrong, and misinterpret the type of action that is being described within the exam paper. The following examples will help cement the application of each risk response in your mind.
For each of the following examples, write down the type of risk response used:
PRINCE2 Example one
The news reports are saying it is increasingly likely that there will be a train strike, so you and I are flying to our destination instead to make sure that we make the meeting on time
PRINCE2 Example two
Our teams have limited experience in this highly complex area, so we are going to outsource this part of the work to an experienced company. If that accompany its problems, they will have to find more experts at their own cost in order to deal with them
PRINCE2 Example three
We may be liable for large costs if our advice to customers is incorrect, so we are taking out professional Indemnity Insurance for all staff with direct customer contact
PRINCE2 Example four
The new headquarters building will be great, and we think it would be really good to have it includes a staff restaurant. A restaurant should be very popular, but that is not guaranteed. We do not have the funds for all of it, but we are inviting the catering company to set up and run a restaurant once we’ve put the basic facilities in place, and then we’ll split the profits.
PRINCE2 Example five
Our staff will have to do technical work that is beyond anything they’ve done before. Things could go wrong, with consequent project delay, but we are sending staff on training courses to boost their knowledge and skill levels
PRINCE2 Example six
Customers are likely to buy more of Power Products, simply because ordering will be easier to the new website been developed by the project. However, we are going to offer a 10 per cent discount for online orders compared with orders placed to other sales channels to make certain of it
PRINCE2 Example seven
The new wear and stalls some heavy goods, and we’ve had a lot of cases of back injury in the past. We are going to put all the really heavy stuff in one’s own, with warning signs around the perimeter to remind warehouse staff to use proper lifting equipment
PRINCE2 Example eight
Bad weather could affect the launch display to the point of it being cancelled. However, because holding the display in a large indoor arena would be very expensive, and because it will be mid-summer, when there’s less chance of rain, we have decided not to take action to change the venue and just hope that the weather is okay.
If, nearer the time, forecasts indicate a high probability of really bad weather, we may think about this again
PRINCE2 Example nine
We may face problems in the office move with the list breaking down. That would cause severe problems with the schedule for the move. We have arranged preventative maintenance though to have them this thoroughly checked and serviced before the move takes place. It will not guarantee that we will avoid problems with the lives, but it will make those risks or less likely
PRINCE2 Example ten
Customers are likely to buy more of the products when they see the better information in the catalogue which is part of this market in project. We could have an electronic catalogue with animated views of the products, which might prove sales even further.
However, we have decided not to pursue that, at least for the time being, because the time and resources needed to do it would postpone the project launch date. We may pick up the idea in a future project
PRINCE2 Example one. Avoid. This response was previously called “prevent”, which actually made the action clear. In this case, if we go by plane, then the train cannot affect us
PRINCE2 Example two. Transfer. The risk impact is being passed to someone else. Subcontracting is a typical risk transfer action
PRINCE2 Example three. Transfer. Another transfer, this time covering the financial impact and passing it to an insurance company – albeit at a cost of the premium. Insurance is another typical transfer action
PRINCE2 Example four. Share. The investment will be shared with a partner in return for sharing the benefit, which is the profit, so it’s a share response for the opportunity-based risk
PRINCE2 Example five. Reduce. The training will not eliminate or avoid the risk, but it will reduce the chances of mistakes with the consequent impact of project delay
PRINCE2 Example six. Exploit. There is a good chance of increased sales, but we are going to try and make an increase certain with the 10% discount
PRINCE2 Example seven. Reduce. Staff may still live things incorrectly, but the warning signs will reduce the chance of injury, by reminding staff to use the proper equipment
PRINCE2 Example eight. Accept. The key words here are “we have decided not to take the action”. It is still in the risk register however, first to explain the current in action, but also so that the risk remains under review; if circumstances change in the expectation of good weather, so might the response
PRINCE2 Example nine. Reduce. The list are less likely to break down with consequent impact on the schedule
PRINCE2 Example ten. Reject. We still hope that will realize the upside risk, but we have judged that it is not worthwhile to go chasing after it in order to make the opportunity more likely
David spent 25 years as a senior project manager for USA multinationals, and has deep experience in project management. He now develops a wide range of project-related downloadable video training products under the Primer and Projex Academy brand names. In addition, David runs project management training seminars across the world, and is a prolific writer on the many topics of project management.