MIS 578 Chapter 11: Project Risk Planning

Question 1

Risk management planning

Answer 1

Upon understanding the success measures and priorities for a project, a project manager develops a risk management plan to decide how to approach, plan, and execute risk management activities for the project.

Roles and responsibilities
Involve as many people as practical in risk planning to get all points of view and good buy-in.

Identify who is responsible for each risk.
Categories and definitions
Projects have many risks. By categorizing them, it is less likely to overlook some. Some industries have typical categories of project risks.

Question 2

Risk identification

Answer 2

Project managers, while responsible for identifying risks, often rely on subject matter experts
(SMEs).

-Information gathering
This can occur in brainstorming, SWOT analysis, structured interviews, and other means.

-Reviews
Reviewing documents developed for the project and other uses helps identify risks.

-Understanding relationships
Flow charts, root cause analysis, and triggers are tools that help understand risk relationships.

-Risk register
This is the primary output of risk identification. It is a living document with much information
regarding risks.

Question 3

Risk analysis

Answer 3

This is understanding enough about each risk to be able to determine how fully and formally it
will be handled.

-Qualitative risk analysis
Project managers consider probability of occurrence and impact if realized for each risk.

-Differentiating between major and minor risks
Using probability and impact, possibly with additional criteria, the project manager decides
which risks need to be considered major and which are minor. The major risks will have
contingency plans and an owner responsible for each plan.

Cause and effect relationships
This is because one way to impact an effect is to understand its cause and impact that, which
indirectly allows the effect to be impacted.

-Cause and effect diagram
This helps a team understand the cause and effect relationships.

-Quantitative techniques in risk analysis
This numerical technique is often used on larger, more complex projects to more clearly
determine the extent of certain risks.

-Risk register updates
Probabilities, impacts, and priorities for each risk should be added to the register.

Question 4

Risk response planning

Answer 4

This is the process of developing options and actions to reduce the impact of negative risks (threats) and to capitalize on positive risks (opportunities).

-Strategies for responding to risks
Six types of strategies exist for responding to risks. Many projects will use multiple strategies
depending on the unique combination of risks to be faced.

-Avoid risk
Sometimes a project plan can be altered to avoid a particular risk.

-Transfer risk
This does nothing to reduce a risk – it just pays some other organization to assume it. Insurance
is a common form of this.

-Mitigate risk
These strategies normally are to lower the probability of the risk event from happening, the
impact if it does happen, or both.

-Accept risk
Project managers accept many minor risks.

-Research risk
Sometimes by learning more about a risk, it can be dealt with better.

-Exploit opportunity
This is increasing the probability, impact, or both of a favorable opportunity.

-Risk register updates
Keep the risk register updated with any results from risk response planning.

Question 5

________________ is an uncertain event or condition that, if it occurs, has a positive or negative effect on a
project’s objectives.

Answer 5

Risk

Question 6

A negative impact is known as a _______________ while a positive impact is known as an
___________________.

Answer 6

Threat, opportunity

Question 7

To reduce the impact of threats and capitalize on opportunities, a project manager should create a
_____________ __________________ _______________.

Answer 7

Risk management plan

Question 8

A project manager should solely handle the responsibility of identifying potential risks for the project. True
of false?

Answer 8

False

Question 9

Most project risks are typically uncovered in the ________________ stage of the project.

Answer 9

Initiating

Question 10

The cost per risk discovered is typically highest in the ________________ stage of the project.

Answer 10

Closing

Question 11

______________ ____________________ is the process of determining which risks might affect the project and documenting their characteristics.

Answer 11

Risk identification

Question 12

When a project manager is gathering information about risks, it is best if she sets a limit on the number of risks that will be considered. True or false?

Answer 12

False

Question 13

It is often helpful if a project manager reviews previous projects to help identify potential risks. True or false?

Answer 13

True

Question 14

________ _________________ ______________________ is an analytical technique used to determine the basic underlying reason that causes a risk.

Answer 14

Root cause analysis

Question 15

A key supplier for your project has not been returning your calls or responding to your emails. This is an
example of a _________________, which indicates that a risk is likely to occur.

Answer 15

Trigger

Question 16

Every risk, no matter how minor or major it is projected to be, should have a contingency plan created to
address it. True or false?

Answer 16

False

Question 17

A qualitative risk assessment typically categorizes the probability and impact of the risk as____________,
__________________, or ___________________.

Answer 17

High, medium, or low

Question 18

A ____________ _________________ is tool that is useful to analyze the cause and effect relationship of
risks.

Answer 18

Fishbone diagram also known as a cause and effect diagram

Question 19

Quantitative risk analysis is used on all projects. True or false?

Answer 19

False

Question 20

In the Risk Register, only one person should be assigned as the “owner” of each identified risk. True or false?

Answer 20

True

Question 21

What is the purpose of risk management?

Answer 21

Risk management is done in the attempt to reduce the overall risk of the project. The risk should be
reduced to a level that is acceptable to all project stakeholders.

Question 22

List six examples of project stakeholder priorities. Describe tradeoffs that may need to be made between them

Answer 22

Scope, quality, time, cost, contribution to organization, and contribution to society

Question 23

Why is it helpful to have a high level of participation in risk management activities?

Answer 23

By involving more people, it is more likely that various perspectives will be considered. This makes it
possible that more potential risks will be uncovered. It is also helpful because people will be more
likely to work enthusiastically on something that they helped plan.

Question 24

List three methods that can be used for categorizing project risks. For a fund raising project, give examples
of risk using each categorizing method

Answer 24

• When the risk occurs in the project life cycle,
• What project objective the risk may impact, and
• What is known about the risk

Question 25

List some helpful questions that a project manager could ask when reviewing the project charter and the
WBS.

Answer 25

• For the charter, it is helpful for the project manager to make sure that there is clarity and total
understanding in each of the charter’s sections.
• For the WBS, it is helpful if the project manager looks for potential risks in each item of the WBS.

Question 26

List the various types of information that is often contained in the risk register.

Answer 26

• A list of all identified risks,
• Description of the risk,
• Category,
• Potential causes,
• Probability,
• Impact,
• Potential responses,
• Owners, and
• Current status.

Question 27

List and briefly explain the 6 common risk strategies that are used. Describe how you might use two or
three of them together on a project.

Answer 27

• Avoid (Change the project plan so that the risk is less likely to occur),
• Transfer (Pass the risk onto someone such as purchasing insurance or hiring an outside firm),
• Mitigate (Lower the likelihood that the risk will occur),
• Accept (Know that the risk is likely to happen and proceed on with the project),
• Research (Get more and better information about the situation), and
• Exploit (Used when there is an opportunity in order to increase the probability of it happening or its
impact).

Question 28

What are the two types of risk analysis?

Answer 28

Quantitative and qualitative

Question 29

For the same campus event project, perform a literature review to identify risks.

Answer 29

Answers vary. Expect students to use more web sites, but articles and books are fine also

Question 30

Engage another student team to perform a peer review of project risks for your project and you perform a peer review for theirs.

Answer 30

Answers vary. Look for insightful comments.

Question 31

For one of the risks identified in exercises 1–3 above, construct a cause and effect diagram to determine
possible root causes. Determine which of the possible root causes are probable. Describe how you would
test each probable root cause to determine if it really is a root cause.

Answer 31

Answers vary. Look for many possible ideas. Quantity is more important than quality of ideas at this
point.

Question 32

For the risks identified in exercises 1–3 above, identify triggers that indicate each risk may be about to
happen.

Answer 32

Answers vary. Look for logical relationships and triggers should be something easily observable that
occurs before the risk event. For example, major risk 6 in exercise 1 above (low attendance) could
have a trigger in low response to RSVPs that are sent out two weeks before the event.

Question 33

Brainstorm and group at least 12 risk factors (as in Exhibits 10.5 and 10.6) for risks in one of the following
types of projects: research and development, organizational change, or quality improvement.

Answer 33

Answers vary. Look for logical groups and realistic sounding