CH8

Question 1

What is a risk in project management?

Answer 1

An uncertain event or condition that, if it occurs, will have a positive or negative effect on one or more project objectives such as scope, cost, and quality.

Question 2

What are the objectives of project risk management?

Answer 2

To increase the probability and impact of positive events and decrease the probability and impact of negative events.

Question 3

What are the key components of a Risk Management Plan?

Answer 3

Risk strategy, methodology, roles & responsibilities, funding, timing, risk categories, risk probability & impact definitions, stakeholder risk appetite, reporting formats, and tracking.

Question 4

What are the key benefits of identifying risks?

Answer 4

It documents individual project risks, brings together information for appropriate responses, and identifies sources of overall project risk.

Question 5

Name four tools used for identifying risks.

Answer 5

Brainstorming, checklists, SWOT analysis, and root cause analysis.

Question 6

A document that captures details of identified risks, their characteristics, potential responses, and updates throughout the project.

Answer 6

Risk Register

Question 7

What is the purpose of qualitative risk analysis?

Answer 7

To prioritize individual project risks by assessing their probability of occurrence and impact to focus on high-priority risks.

Question 8

What is a Probability and Impact Matrix?

Answer 8

A tool that divides risks into priority groups based on the likelihood and potential impact, helping prioritize risk responses.

Question 9

A simulation technique used in quantitative risk analysis to model the combined effects of risks on project objectives.

Answer 9

the Monte Carlo analysis.

Question 10

What are the strategies for responding to threats?

Answer 10

Escalate, avoid, transfer, mitigate, and accept.

Question 11

What are the strategies for responding to opportunities?

Answer 11

Escalate, accept, exploit, share, and enhance.

Question 12

What is the difference between “enhance” and “exploit” in risk response strategies?

Answer 12

“Enhance” increases the probability of the opportunity occurring, while “exploit” ensures the opportunity is realized with certainty.

Question 13

What is the role of risk monitoring?

Answer 13

To track identified risks, monitor the implementation of responses, identify new risks, and evaluate the effectiveness of risk management processes.

Question 14

What is reserve analysis in risk monitoring?

Answer 14

It compares the remaining contingency reserves to the amount of risk remaining in the project.

Question 15

Define “residual risks” and “secondary risks.”

Answer 15

Residual risks are those remaining after planned responses, while secondary risks arise as a direct result of implementing a risk response.

Question 16

T/F: Risk in project management only refers to negative events.

Answer 16

False. Risks can have positive or negative effects on project objectives.

Question 17

T/F: A risk with a 100% chance of occurring is called an issue, not a risk.

Answer 17

T

Question 18

T/F: The main objective of project risk management is to eliminate all risks.

Answer 18

False. The objective is to increase the probability of positive events and decrease the probability of negative events.

Question 19

T/F: The Risk Management Plan includes information about roles and responsibilities.

Answer 19

True.

Question 20

T/F: Brainstorming is not an effective tool for identifying project risks.

Answer 20

False. Brainstorming is a widely used technique for risk identification.

Question 21

T/F: The risk register is only updated at the beginning of a project.

Answer 21

False. The risk register is updated throughout the project.

Question 22

T/F: Qualitative risk analysis assesses the likelihood and impact of risks.

Answer 22

True.

Question 23

T/F: Quantitative risk analysis is required for every project.

Answer 23

False. It is not required for every project and is used selectively.

Question 24

T/F: A Monte Carlo analysis is a qualitative risk analysis technique.

Answer 24

False. It is a quantitative risk analysis technique.

Question 25

T/F: Mitigation is a risk response strategy that reduces the probability or impact of a threat.

Answer 25

True.

Question 26

T/F: "Exploit" and "Enhance" are strategies for responding to threats.

Answer 26

False. They are strategies for responding to opportunities.

Question 27

T/F: Reserve analysis compares contingency reserves with the remaining risks in the project.

Answer 27

True.

Question 28

T/F: Secondary risks are new risks that arise directly from implementing a risk response.

Answer 28

True.

Question 29

T/F: The Probability and Impact Matrix is used to identify low-priority risks for further analysis.

Answer 29

False. It is used to prioritize risks based on their likelihood and impact.

Question 30

T/F: Risk monitoring involves identifying and analyzing new risks throughout the project.

Answer 30

True

Question 31

A project team discovers that a critical supplier may not deliver materials on time due to political instability. What risk response strategy should the team use if they want to transfer the impact to another party?

Answer 31

The team should use the transfer strategy, such as purchasing insurance or setting up contracts to shift the risk to a third party.

Question 32

During the execution phase, a project manager notices that risks identified earlier have not materialized, but new risks have emerged. What process should the project manager focus on?

Answer 32

The project manager should focus on monitoring risks, which involves tracking existing risks and identifying new ones.

Question 33

The team identifies an opportunity to use a new technology that could significantly reduce project costs. They decide to assign their best resources to ensure this happens. What strategy are they applying?

Answer 33

They are applying the exploit strategy to maximize the chance of realizing the opportunity.

Question 34

A project manager identifies a low-priority risk that cannot be effectively addressed due to resource constraints. What is the most appropriate response?

Answer 34

The most appropriate response is acceptance, either actively by setting aside contingency reserves or passively by periodically reviewing the risk.

Question 35

A project team uses a SWOT analysis to evaluate potential risks. They find that one weakness in the project plan could lead to a significant delay. What should their next step be?

Answer 35

The team should document the weakness in the risk register and evaluate mitigation strategies to reduce its probability or impact.

Question 36

During risk analysis, a project team uses a Tornado Diagram to identify risks with the highest potential impact on project objectives. What type of analysis are they conducting?

Answer 36

They are conducting sensitivity analysis, which helps prioritize risks based on their potential impact.

Question 37

A risk with a very high impact but low probability is identified during a project. The organization has a low tolerance for risks affecting the timeline. What should the project manager do?

Answer 37

The project manager should escalate the risk to a higher level of management if it exceeds the project scope or use the avoid strategy to eliminate the threat.

Question 38

A project involves creating an innovative product, but there is a high risk of design flaws due to new technology. What risk response strategy should the team use to reduce this threat? a) Accept b) Mitigate c) Exploit d) Transfer

Answer 38

b) Mitigate

Question 39

During implementation, a risk response plan fails to address a risk effectively. What should the project manager do next? a) Create a new risk register b) Abandon the response c) Implement a fallback plan d) Conduct an audit

Answer 39

c) Implement a fallback plan

Question 40

A team shares a business opportunity with a partner to increase the likelihood of its success. What risk response strategy does this represent? a) Enhance b) Exploit c) Transfer d) Share

Answer 40

d) Share

Question 41

A contingency reserve was set aside for a specific risk that did not occur. How should the project manager handle this during monitoring? a) Cancel the contingency plan b) Reallocate the unused reserve c) Reduce the project's scope d) Use it for new features

Answer 41

b) Reallocate the unused reserve

Question 42

A project sponsor wants to ensure that all identified risks are documented and categorized effectively. What tool or output should the project team provide? a) Risk Management Plan b) Probability and Impact Matrix c) Risk Register d) SWOT Analysis

Answer 42

c) Risk Register

Question 43

The team identifies a risk related to market volatility that may impact project funding. They decide to monitor this risk without taking immediate action. What risk response strategy are they applying? a) Avoidance b) Active Acceptance c) Passive Acceptance d) Transfer

Answer 43

c) Passive Acceptance

Question 44

A project team realizes that their assumption about the availability of a key resource was incorrect, posing a significant risk. What type of analysis could have helped identify this earlier? a) SWOT Analysis b) Reserve Analysis c) Root Cause Analysis d) Assumption and Constraint Analysis

Answer 44

d) Assumption and Constraint Analysis