Ch. 11: Managing Project Risk

Question 1

A risk response appropriate for both positive and negative risks, but often used for smaller risks within a project.

Answer 1

Acceptance

Question 2

A risk response to avoid the risk; sometimes called a workaround.

Answer 2

Avoidance

Question 3

The most common approach to risk identification; usually completed as a project team with subject matter experts to identify the risks within the project.

Answer 3

Brainstorming

Question 4

These risks may have negative or positive outcomes. Examples include using a less experienced worker to complete a task, allowing phases or activities to overlap, or foregoing the expense of formal training for on-the-job
education.

Answer 4

Business risks

Question 5

A ranking approach to identify the probability and impact on a numerical value, from .01 (very low) to 1.0
(certain).

Answer 5

Cardinal scales

Question 6

A quick and cost-effective risk identification approach.

Answer 6

Checklists

Question 7

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

Answer 7

Data precision

Question 8

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

Answer 8

Decision tree

Question 9

An anonymous method of querying experts about foreseeable risks within a project, phase, or
component of a project. The results of the survey are analyzed by a third party, organized, and then circulated to the experts. There can be several rounds of anonymous discussion with the Delphi Technique, without fear of backlash or offending other participants in the process. The goal is to gain consensus on project risks within the project.

Answer 9

Delphi Technique

Question 10

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

Answer 10

Enhancing

Question 11

The monetary value of a risk exposure based on the risk’s probability and impact in the risk matrix. This approach is typically used in quantitative risk analysis, as it quantifies the risk exposure.

Answer 11

Expected monetary value (EMV)

Question 12

A risk response that takes advantage of the positive risks within a project.

Answer 12

Exploit

Question 13

These risks are outside of the project, but directly affect it—for example, legal issues, labor issues, a shift in project priorities, or weather. “Force majeure” risks call for disaster recovery rather than project management. These are risks caused by earthquakes, tornados, floods, civil unrest, and other disasters.

Answer 13

External risks

Question 14

System or process flow charts show the relationship between components and how the overall process works. These are useful for identifying risks between system components.

Answer 14

Flow charts

Question 15

An influence diagram charts out a decision problem. It identifies all of the elements, variables,
decisions, and objectives and also how each factor may influence another.

Answer 15

Influence diagrams

Question 16

These cause-and-effect diagrams are also called fishbone diagrams and are used to find the root
cause of factors that are causing risks within the project.

Answer 16

Ishikawa diagrams

Question 17

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

Answer 17

Low-priority risk watchlist

Question 18

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

Answer 18

Mitigation

Question 19

A simulation technique that got its name from the casinos of Monte Carlo, Monaco. The simulation is completed using a computer software program that can simulate a project, using values for all possible
variables, to predict the most likely model.

Answer 19

Monte Carlo technique

Question 20

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

Answer 20

Ordinal scales

Question 21

The performing organization can contribute to the project’s risks through unreasonable cost, time,
and scope expectations; poor project prioritization; inadequate funding or the disruption of funding; and competition with other projects for internal resources.

Answer 21

Organizational risks

Question 22

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.

Answer 22

Probability and impact matrix

Question 23

These risks deal with faults in the management of the project: the unsuccessful allocation of
time, resources, and scheduling; unacceptable work results; and poor project management.

Answer 23

Project management risks

Question 24

These risks have only a negative outcome. Examples include loss of life or limb, fire, theft, natural disasters, and the like.

Answer 24

Pure risks

Question 25

This approach "qualifies" the risks that have been identified in the project. Specifically, qualitative risk analysis examines and prioritizes risks based on their probability of occurring and their impact on the project should they occur.

Answer 25

Qualitative risk analysis

Question 26

This approach attempts to numerically assess the probability and impact of the identified risks. It also creates an overall risk score for the project. This method is more in-depth than qualitative risk analysis and relies on several different tools to accomplish its goal.

Answer 26

Quantitative risk analysis

Question 27

An ordinal scale that uses red, amber, and green to capture the probability, impact, and risk score. The first letter of red, amber, and green equate to "RAG" in the system.

Answer 27

RAG rating

Question 28

These are risks that are expected to remain after a risk response.

Answer 28

Residual risks

Question 29

A project risk is an uncertain event or condition that can have a positive or negative impact on the project.

Answer 29

Risk

Question 30

The systematic process of combing through the project, the project plan, the work breakdown structure, and all supporting documentation to identify as many risks that may affect the project as possible.

Answer 30

Risk identification

Question 31

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

Answer 31

Risk management plan

Question 32

The agreed-upon approach to the management of the project risk processes.

Answer 32

Risk management planning

Question 33

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

Answer 33

Risk owners

Question 34

The risk register is 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.

Answer 34

Risk register

Question 35

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

Answer 35

Risk response audit

Question 36

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

Answer 36

Risk responsibilities

Question 37

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

Answer 37

Risk score

Question 38

Root cause identification aims to find out why a risk event may be occurring, the causal factors for the risk events, and then, eventually, how the events can be mitigated or eliminated.

Answer 38

Root cause identification

Question 39

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

Answer 39

Secondary risks

Question 40

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

Answer 40

Sensitivity analysis

Question 41

A risk response that shares the advantages of a positive risk within a project.

Answer 41

Sharing

Question 42

SWOT analysis is the process of examining the project from the perspective of each characteristic: strengths, weaknesses, opportunities, and threats.

Answer 42

SWOT analysis

Question 43

Technical risks are associated with new, unproven, or complex technologies being used on the project. Changes to the technology during the project implementation can also be a risk. Quality risks are the levels set for expectations of impractical quality and performance.

Answer 43

Technical, quality, or performance risks

Question 44

A risk response that transfers the ownership of the risk to another party. Insurance, licensed contractors, or other project teams are good examples of transference. A fee and contractual relationships are typically involved with the transference of a risk.

Answer 44

Transference