PRINCE2F PRINCE2 Practices Practice Question
A PRINCE2 project is in the middle of a stage. The Project Manager has identified a risk that a key supplier may go bankrupt, which could delay the project by three months and increase costs by 20%. The Project Board has set a risk tolerance for the stage. According to PRINCE2's Risk practice, what should the Project Manager do FIRST?
⚠ Common exam trap
The trap here is assuming that a serious risk automatically requires escalation; the Project Manager must first evaluate it against the stage risk tolerance.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Assess the risk's probability and impact, update the Risk Register, and determine whether the risk exceeds the stage risk tolerance before deciding on escalation or response.
In PRINCE2, risks are managed by assessing their probability and impact, recording them in the Risk Register, and evaluating them against tolerances. The Project Manager must first determine whether the risk exceeds the stage risk tolerance. If it does, it must be escalated to the Project Board. If not, the Project Manager can implement an appropriate response. This ensures that risks are managed at the correct level.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Assess the risk's probability and impact, update the Risk Register, and determine whether the risk exceeds the stage risk tolerance before deciding on escalation or response.
Why this is correct
The Risk practice requires that risks are identified, assessed, and evaluated against tolerances. The Project Manager must first assess the probability and impact, update the Risk Register, and then compare the risk to the stage risk tolerance. If within tolerance, the Project Manager can manage it; if not, it must be escalated to the Project Board. This ensures management by exception.
- ✗
Ask the supplier for financial guarantees to prevent bankruptcy, as this is a proactive risk mitigation action.
Why it's wrong here
Requesting financial guarantees is a specific risk response that may not be appropriate or feasible. The Project Manager should not jump to a response before assessing the risk and determining whether it exceeds tolerance. Additionally, such a request may be beyond the Project Manager's authority and could damage the supplier relationship without proper evaluation.
- ✗
Escalate the risk to the Project Board immediately because it threatens a key supplier and could impact the Business Case.
Why it's wrong here
Escalation is required only if the risk exceeds the stage risk tolerance. The Project Manager should first assess the risk's probability and impact against the risk tolerance. Escalating immediately without evaluation may be premature and would bypass the management by exception principle, where the Project Manager is empowered to manage risks within tolerance.
- ✗
Implement a risk response to mitigate the risk, then update the Risk Register and inform the Project Board in the next Highlight Report.
Why it's wrong here
While implementing a response and updating the Risk Register are correct actions, the first step is to evaluate whether the risk exceeds the stage risk tolerance. If it does, escalation is required. Proceeding directly to implement a response without assessing tolerance could lead to inappropriate action if the risk actually exceeds the Project Manager's authority.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official PeopleCert exam blueprint
This PRINCE2F practice question is part of Courseiva's free PeopleCert certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PRINCE2F exam.