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ACCA Strategic Professional · Strategic Business Leader · Leading and managing projects

Lumen Foods is launching a new product line. The project risk register shows a risk with a low probability of occurring but a catastrophic impact on safety if it does, such as contamination at the pilot plant. Which response is most appropriate under a typical risk matrix approach?

The risk deserves senior attention with preventive controls and contingency or transfer arrangements. A risk matrix weighs impact as well as likelihood, so a catastrophic safety consequence warrants active management even when probability is low. Ignoring it, monitoring it only at project close or delegating it to junior staff is inadequate.

  1. AIgnore it because the probability is low
  2. BAccept it and monitor it only at the project close
  3. CGive it senior attention with preventive controls and contingency or transfer arrangements because of the severity of impactCorrect
  4. DDelegate it to the most junior team member to track

Explanation

Risk matrices consider both probability and impact, and low-probability, high-impact risks require preventive controls and contingency plans or transfer such as insurance. Ignoring it relies on probability alone. Monitoring only at close and junior delegation provide inadequate control.

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