International Project Management Association (IPMA) Practice Exam

Which approach is best when managing project risks?

1. Ignoring low-level risks

2. Assessing and prioritizing all potential risks

3. Only documenting risks without analysis

4. Leaving risk management to the project sponsor

The correct answer is: Assessing and prioritizing all potential risks

The approach of assessing and prioritizing all potential risks is essential in effective project risk management. This method enables project managers to understand the potential impact and likelihood of each risk, allowing for informed decision-making. By systematically assessing risks, managers can identify which risks require immediate attention, which can be monitored, and which are low enough that they can be accepted without a significant impact on project objectives. Prioritization of risks ensures that resources are allocated efficiently towards risks that could have the most severe consequences on project success. It guides the development of mitigation strategies where necessary, promoting proactive management rather than reactive responses. This comprehensive engagement with risks enhances the project team's ability to foresee challenges and devise strategies to minimize their impact, ultimately leading to more successful project outcomes. In contrast, ignoring low-level risks overlooks potentially advantageous opportunities to improve project processes or outcomes. Documenting risks without further analysis limits understanding and could lead to a false sense of security. Delegating all risk management responsibilities to the project sponsor can result in inadequate attention to risks that may evolve during the project lifecycle and requires a collaborative effort from the entire project team, not just high-level stakeholders.