Chapter 11 - Risk Mgmt

Question 1

What is individual project risk?

Answer 1

An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives

Question 2

What is overall project risk?

Answer 2

The effect of uncertainty on the project as a whole, arising from all sources of uncertainty including individual risks. It represents the exposure of stakeholders to the implications of variations in the project outcome

Question 3

What sort of things might be in the risk management plan?

Answer 3

• risk strategy
• methodology to perform risk management (tools, data sources etc)
• roles and responsibilities
• funding: identifies the funds needed to perform risk management and establishes protocols for the application of contingency and management reserves
• timing: when will risk mgmt be performed?
• risk categories and risk breakdown structure (rbs) (categories of risks)
• stakeholder risk appetite
• definition of risk probability and impacts
• probability and impact matrix
• reporting formats
• tracking of how risk activities will be recorded

Question 4

What are techniques for identifying risks?

Answer 4

1. Expert judgement
2. Data gathering (brainstorming, checklists, interviews)
3. Data analysis (root cause analysis, assumption and constraint analysis, SWOT analysis, document analysis)
4. Interpersonal and team skill
5. Prompt lists (predetermined list of risk categories)
6. Meetings

Question 5

What is qualitative risk analysis?

Answer 5

The process of prioritising individual project risks for further analysis or action by assessing their probability of occurrence and impact as well as other characteristics. The key benefit is that it focuses efforts on high-priority risks

Question 6

What is quantitative risk analysis?

Answer 6

The process of numerically analysing the combined effect of identified individual project risks and other sources of uncertainty on overall project objective. Not required for every project

Question 7

What are examples of data analysis tools used for quantitative risk analysis?

Answer 7

• Simulation (e.g. Monte Carlo&raquo_space;>S-curve) & criticality analysis (which elements of the risk model have the greatest effect on the critical path)
• Sensitivity analysis: which individual project risks have the most potential impact on the project outcomes&raquo_space;> tornado diagram
• decision tree analysis: possible decisions and events and associated costs
• influence diagrams

Question 8

What is the risk report?

Answer 8

A project document developed progressively throughout the Project Risk management processes, which summarises information on individual project risks and the level of overall project risk

Question 9

What is a secondary risk?

Answer 9

A risk that arises as a direct result of implementing a risk response

Question 10

What is the risk register?

Answer 10

Contains details on individual project risks, for which risk responses are required:

• Priority of the risk
• Risk owner
• Root causes
• Risk triggers
• Response strategies
• Budget and schedule required for response strategies
• Residual risk after response
• Secondary risks

Question 11

What are the five strategies for dealing with threats?

Answer 11

1. Escalate - threat is outside scope of project and manager has insufficient authority to respond
2. Avoid
3. Transfer - e.g. insurance
4. Mitigate
5. Accept

Question 12

What are the five strategies for dealing with opportunities?

Answer 12

1. Escalate
2. Exploit
3. Share
4. Enhance
5. Accept

Question 13

What is an example of avoiding overall project risk?

Answer 13

Example 1: Reduce scope

Example 2: Cancel project (!)

Question 14

What are the inputs to plan risk management?

Answer 14

– Project charter
– project management plan
– project documents (stakeholder register)
– enterprise environmental factors
– organisational process assets

Question 15

What is risk appetite?

Answer 15

A high-level description of an individual or group’s openness to risk

Question 16

What is a risk threshold?

Answer 16

A measurable amount of risk that an individual or group are willing to accept within a specific category

Question 17

What is a risk category?

Answer 17

The same as a source of risk, a broad common area of risk that the company or similar projects have experienced

Question 18

What is business risk vs pure risk?

Answer 18

A business risk can be beneficial or detrimental. A pure risk is always detrimental and can sometimes be insured against, for example theft or fire

Question 19

What is a variability risk?

Answer 19

A risk caused by the inability to predict future changes

Question 20

What is an ambiguity risk?

Answer 20

A risk caused by lack of understanding

Question 21

When in the risk management process or risk responses documented?

Answer 21

During identify risks (as potential responses) and during plan risk responses (a selected response plans)

Question 22

What is risk data quality assessment?

Answer 22

Assessing the accuracy and reliability of the data to determine if the risk is valid and whether more research is needed to understand the risk. It is part of perform qualitative risk analysis

Question 23

What are examples of risk parameters?

Answer 23

– Urgency: the likelihood of occurrence soon
– dormancy: the anticipated time between when a risk occurs in when it’s impact is felt on the project
– manageability and controllability
– strategic impact

Question 24

What is the purpose of quantitative risk analysis?

Answer 24

– Determine which risk events warrant a response
– determine the overall project risk
– determine the quantified probability of meeting project objectives
– determent cost and schedule reserves
– identify risks requiring the most attention
– create realistic and achievable cost, schedule, or scope targets

Question 25

What is the tornado diagram and where is it used?

Answer 25

A tornado diagram displays risks by range of costs compared to budget (or schedule), with the longest and uppermost bars representing the greatest risk

Used in sensitivity analysis

Question 26

What is a workaround?

Answer 26

Unplanned responses developed to deal with the occurrence of unanticipated events or problems on a project or to deal with the risks that had been accepted. Occurs during monitor risks

Question 27

What is a risk audit?

Answer 27

An audit to assess the overall process of risk management on the project. The auditing process is documented in the risk management plan

Question 28

During which two processes are most of the project risks identified?

Answer 28

During identify risks and monitor risks