11 - Project Risk Management Terms

Question 1

Acceptance

Answer 1

A risk response appropriate for both +VE and -VE risks. Often used for smaller risks within a project.

Question 2

Ambiguity risks

Answer 2

Risks that have an uncertain, unclear nature, such as new laws or regulations, the marketplace conditions and other risks that are nearly impossible to predict.

Question 3

Avoidance

Answer 3

A risk response to avoid the risk

Question 4

Brainstorming

Answer 4

The most common approach to risk identification. Usually completed with SMEs

Question 5

Business risks

Answer 5

Risks that may have +VE or -VE outcomes.

Question 6

Cardinal scales

Answer 6

A ranking approach to identify the probability and impact by using a numerical value from 0.01 (low) to 1.0 (certain)

Question 7

Checklists

Answer 7

A quick and cost-effective risk identification approach

Question 8

Data precision

Answer 8

The consideration of the risk ranking scores. Takes into account bias, the accuracy of the data submitted, and the reliability of the nature of the data submitted.

Question 9

Decision tree

Answer 9

A method to determine which of two or more decisions is the best one. The model examines cost/benefits of each decision outcome, and weighs the probability of success for each decision.

Question 10

Delphi technique

Answer 10

An anonymous method of querying experts about foreseeable risks within a project/phase/component of a project. The goal is to gain consensus on project risks within the project.

Question 11

Enhancing

Answer 11

A risk response that attempts to enhance the conditions to ensure that a positive risk event will likely happen

Question 12

Escalating

Answer 12

A risk response that is appropriate for both +VE and -VE risk events that may be outside of the PM’s authority to act upon.

Question 13

Expected monetary value (EMV)

Answer 13

Monetary value of a risk exposure:
risk probability x $ impact
Used in quantitative analysis.

Question 14

Exploit

Answer 14

A risk response that takes advantage of the +VE risk within a project.

Question 15

External risks

Answer 15

Risks that are outside of a project, but directly affect it (e.g. legal/labor issues, weather etc…)
“Force majeure” risks call for disaster recovery rather than project management.

Question 16

Flowcharts

Answer 16

System/process flowcharts show the relationship between components and how the overall process works.
Useful for identifying risks between components.

Question 17

Influence diagrams

Answer 17

Charts out a decision problem. Identifies all of the elements, variables, decisions, and objectives and also how each factor may influence another.

Question 18

Ishikawa diagrams

Answer 18

AKA Fishbone diagrams. Cause and effect diagrams used to find the root cause of factors that are causing risks within the project.

Question 19

Low-priority risk watch list

Answer 19

Low priority risks are identified and assigned to a watch list for periodic monitoring

Question 20

Mitigation

Answer 20

A risk response effort to reduce the probability and/or impact of an identified risk in the project.

Question 21

Monte Carlo technique

Answer 21

A simulation completed using a computer software that can simulate a project, using values for all possible variables, in order to predict the most likely model.

Question 22

Ordinal scales

Answer 22

A ranking approach that identifies and ranks the risks from very high to very unlikely or to some other value.

Question 23

PESTLE

Answer 23

A prompt list used for risk identification in the following domains:
Political
Economical
Social
Technological
Legal
Environmental

Question 24

Probability and impact matrix

Answer 24

A matrix that ranks the probability of a risk event occurring and its impact on the project if the event DOES happen. Used in qualitative and quantitative risk analyses.

Question 25

Project management risks

Answer 25

Risks dealing with the unsuccessful mgmt of the project. | Eg. unsuccessful allocation of time/resources/scheduling, unacceptable results

Question 26

Pure risks

Answer 26

Risk with only a -VE outcome

Question 27

Qualitative risk analysis

Answer 27

An approach that "qualifies" the risks that have been identified in the project. Analyzes and prioritizes risks based on their probability of occurring and impact.

Question 28

Quantitative risk analysis

Answer 28

Numerically assesses the probability and impact of the identified risks. Creates an overall risk score for the project.

Question 29

RAG rating

Answer 29

``` Ordinal scale, uses RED AMBER GREEN to capture probability, impact and risk score ```

Question 30

Residual risk

Answer 30

Risks that are expected to remain after a risk response.

Question 31

Risk

Answer 31

An uncertain project event/condition that may have a +VE or -VE impact.

Question 32

Risk identification

Answer 32

Systematic process of combing through the project, the project plan, the WBS and all supporting documentation to identify as many risks as possible that may affect the project

Question 33

Risk management plan

Answer 33

A project management subsidiary plan that defines how risk will be identified, analyzed, responded to and monitored within the project. Also identifies the iterative risk management process the project is expected to adhere to.

Question 34

Risk management planning

Answer 34

Agreed-upon approach to the management of the project risk process.

Question 35

Risk owners

Answer 35

Individuals or entities that are responsible for monitoring and responding to an identified risk within the project.

Question 36

Risk register

Answer 36

A project plan component that contains all of the information related to the risk management activities. It's updated as risk management activities are conducted to reflect the status, progress and nature of the project risks.

Question 37

Risk report

Answer 37

Explains the overall project risks and provides summaries about individual project risks.

Question 38

Risk response audit

Answer 38

An audit to test the validity of the established risk responses.

Question 39

Risk responsibilities

Answer 39

The level of ownership an individual or entity has over a project risk.

Question 40

Risk score

Answer 40

Calculated score based on each risk's probability and impact. The approach can be used in both qualitative and quantitative risk analysis.

Question 41

Root cause identification

Answer 41

Aims to find identify the causal factors for risk event, and then how to events can be mitigated or eliminated.

Question 42

Secondary risks

Answer 42

New risks that are created as a result of a risk response.

Question 43

Sensitivity analysis

Answer 43

A quantitative risk analysis tool that examines each risk to determine which one has the largest impact on the project's success.

Question 44

Sharing

Answer 44

A risk response that shares the advantages of a +VE risk within a project

Question 45

SWOT analysis

Answer 45

``` Examining the project from the perspective of each of the following characteristics: Strengths Weaknesses Opportunities Threats ```

Question 46

TECOP

Answer 46

``` A prompt list used in risk management to examine the below factors in a project: Technical Environmental Commercial Operational Political ```

Question 47

Technical, quality, or performance risks

Answer 47

Technical risk: new, unproven, or complex technologies | Quality/performance risk: levels set for expectations of impractical quality/performance.

Question 48

Transference

Answer 48

A risk response that transfers the risk ownership to another party. (E.g. insurance, licensed contractors) A fee and a contractual relationship are generally involved with the transference of risk.

Question 49

Variability risk

Answer 49

A type of risk based on the variations that may occur in the project (e.g. production, number of quality errors, or even weather).

Question 50

VUCA

Answer 50

``` A prompt list used in risk identification that examines the below risk factors within a project: Volatility Uncertainty Complexity Ambiguity ```