Project Risk Management Terms

Question 1

Cardinal scales

Answer 1

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

Question 2

Data precision

Answer 2

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 of the data submitted.

Question 3

Decision tree

Answer 3

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

Question 4

Delphi Technique

Answer 4

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.

Question 5

Ishikawa diagrams

Answer 5

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.

Question 6

Mitigation

Answer 6

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

Question 7

Monte Carlo technique

Answer 7

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.

Question 8

Organizational risks

Answer 8

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.

Question 9

PESTLE

Answer 9

A prompt list used for risk identification. PESTLE examines risks in the Political, Economic, Social, Technological, Legal, and Environmental domains.

Question 10

Probability and impact matrix

Answer 10

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.

Question 11

Qualitative risk analysis

Answer 11

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.

Question 12

Quantitative risk analysis

Answer 12

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.

Question 13

RAG rating

Answer 13

An ordinal scale that uses red, amber, and green (RAG) to capture the probability, impact, and risk score.

Question 14

Risk management plan

Answer 14

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.

Question 15

Risk owners

Answer 15

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

Question 16

Risk register

Answer 16

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.

Question 17

Risk responsibilities

Answer 17

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

Question 18

Secondary risks

Answer 18

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

Question 19

Sensitivity analysis

Answer 19

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

Question 20

SWOT analysis

Answer 20

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

Question 21

TECOP

Answer 21

A prompt list used in risk identification to examine the Technical, Environmental, Commercial, Operational, and Political factors of the project.

Question 22

Technical, quality, or performance risks

Answer 22

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.

Question 23

Transference

Answer 23

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.

Question 24

Variability risks

Answer 24

A type of risk based on the variations that may occur in the project, such as production, number of quality errors, or even the weather.

Question 25

VUCA

Answer 25

A prompt list used in risk identification that examines the Volatility, Uncertainty, Complexity, and Ambiguity of risk factors within the project.