Chapter 11 Vocab

Question 1

acceptance

Answer 1

This is a response to a risk event, generally made when the probability of the event and/or its impact is small. It is used when mitigation, transference, and avoidance are not selected.

Question 2

avoidance

Answer 2

This is one response to a risk event. The risk is avoided by planning a different technique to remove the risk from the project.

Question 3

brainstorming

Answer 3

The most common approach to risk identification; it is performed by a project team to identify the risks within the project. A multidisciplinary team, hosted by a project facilitator, can also perform brainstorming.

Question 4

cause-and-effect diagrams

Answer 4

Used for root-cause analysis of what factors are creat- ing the risks within the project. The goal is to identify and treat the root of the problem, not the symptom.

Question 5

contingency reserve

Answer 5

A time or dollar amount allotted as a response to risk events that may occur within a project.

Question 6

decision tree analysis

Answer 6

A type of analysis that determines which of two decisions is the best. The decision tree assists in calculating the value of the decision and determin- ing which decision costs the least.

Question 7

Delphi Technique

Answer 7

A method to query experts anonymously on foreseeable risks within the project, phase, or component of the project. The results of the survey are analyzed and organized, and then circulated to the experts. There can be several rounds of anonymous discussions with the Delphi Technique The goal is to gain consensus
on project risks, and the anonymous nature of the process ensures that no one expert’s advice overtly influences the opinion of another participant.

Question 8

enhance

Answer 8

To enhance a risk is to attempt to modify its probability and/or its impacts to realize the most gains from it.

Question 9

exploit

Answer 9

The organization wants to ensure that the identified risk does happen to real- ize the positive impact associated with the risk event.

Question 10

influence diagram

Answer 10

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

Question 11

mitigation

Answer 11

Reducing the probability or impact of a risk.

Question 12

qualitative risk analysis

Answer 12

An examination and prioritization of the risks based on their probability of occurring and the impact on the project if they do occur. Qualitative risk analysis guides the risk reaction process.

Question 13

quantitative risk analysis

Answer 13

A numerical assessment of the probability and impact of the identified risks. Quantitative risk analysis also creates an overall risk score for the project.

Question 14

residual risks

Answer 14

Risks that are left over after mitigation, transference, and avoidance. These are generally accepted risks. Management may elect to add contingency costs and time to account for the residual risks within the project.

Question 15

risk

Answer 15

An unplanned event that can have a positive or negative influence on the project’s success.

Question 16

risk categories

Answer 16

These help organize, rank, and isolate risks within the project.

Question 17

risk management plan

Answer 17

A subsidiary project plan for determining how risks will be identified, how quantitative and qualitative analyses will be completed, how risk response planning will happen, how risks will be monitored, and how ongoing risk man- agement activities will occur throughout the project life cycle.

Question 18

risk owners

Answer 18

The individuals or groups responsible for a risk response.

Question 19

risk register

Answer 19

Documentation of all risk events and their conditions, impact, prob-
ability, and overall risk score.

Question 20

scales of probability and impact

Answer 20

Used in a risk matrix in both qualitative and quantitative risk analyses to score each risk’s probability and impact.

Question 21

secondary risks

Answer 21

Risks that stem from risk responses. For example, the response of transference may call for hiring a third party to manage an identified risk. A secondary risk caused by the solution is the failure of the third party to complete its assignment as scheduled. Secondary risks must be identified, analyzed, and planned for, just like any other identified risk.

Question 22

sensitivity analysis

Answer 22

This examines each project’s risk on its own merit to assess the impact on the project. All other risks in the project are set at a baseline value.

Question 23

share

Answer 23

When sharing, the risk ownership is transferred to the organi- zation that can most capitalize on the risk opportunity.

Question 24

simulation

Answer 24

This allows the project team to play “what-if” games without affecting any areas of production.

Question 25

system or process flow charts

Answer 25

These show the relationship between components and how the overall process works. They are useful for identifying risks between system components.

Question 26

transference

Answer 26

A response to risks in which the responsibility and ownership of the risk are transferred to another party (for example, through insurance).

Question 27

triggers

Answer 27

Warning signs or symptoms that a risk has occurred or is about to occur (for example, a vendor failing to complete their portion of the project as scheduled).

Question 28

utility function

Answer 28

person’s willingness to accept risk.

Question 29

workarounds

Answer 29

Workarounds are unplanned responses to risks that were not identified or expected.