Exam PRINCE2-Practitioner topic 11 question 42 discussion

The executive has set the following tolerances for stage 2:
Time (+/- 1 week)
Cost (+/- ֲ£20,000)
Scope (using MoSCoW prioritization technique)
Risk (based on the risk appetite defined in the risk management approach)
These tolerances have been recorded in the stage plan. The project manager will report progress regularly via highlight reports to the project board and use exception reports to raise exceptions. In addition, the project assurance role will monitor the stage to provide confidence to the project board that exceptions are being reported.
How well does this apply the 'manage by exception' principle, and why?