Exam PRINCE2-Foundation topic 1 question 349 discussion

The risk budget in PRINCE2 is specifically allocated to cover the costs associated with implementing risk responses, such as contingent plans (e.g., fallback actions or mitigation efforts). This budget ensures that the project has sufficient financial resources to address risks without affecting the overall project budget for planned activities.

B = correct; Here’s why the other options are incorrect: PLEASE FIX MOD A. It is used to fund all aspects of risk assessment and planning While risk assessment and planning are important, the costs associated with these activities are typically included in the overall project budget, not the specific risk budget. The risk budget is intended for actioning contingency plans rather than covering all risk management activities. C. It is used to supplement cost tolerance by funding risk activities Although the risk budget may help manage financial uncertainties, it is not designed to supplement cost tolerances for general project expenses. Its purpose is to specifically fund actions related to risk responses if they are triggered. D. It is an explicit budget held outside of the overall project budget The risk budget is a part of the overall project budget, earmarked specifically for risk response actions, rather than being a separate, external budget.

B is correct - reference prince2 guide 10.3.7 Risk budget This is a sum of money to fund specific management responses to the project's threats and opportunities (e.g. to cover the costs of any contingent plans should a risk materialize).