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Construction Project Management (CPM) > Risk Management > Flashcards

Risk Management Flashcards

1
Q

What is the definition of Risk?

A

An uncertain event or condition that, if it occurs, has an effect on at least one project objective such as scope, schedule, cost, quality, or performance.

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2
Q

What distinguishes an ISSUE from a RISK?

A

If there is a 100% chance of an event occurring, it is an ISSUE, not a RISK.

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3
Q

What are THREATS in the context of risk?

A

Risk with negative consequences.

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4
Q

What are OPPORTUNITIES in the context of risk?

A

Risk with positive consequences.

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5
Q

What is the difference between Individual Project Risk and Overall Project Risk?

A

Individual Project Risk is an uncertain event affecting specific project objectives, while Overall Project Risk is the effect of uncertainty from all sources on the project.

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6
Q

What does Project Risk Management include?

A

Processes of conducting risk management planning, identification, analysis, response planning, response implementation, and monitoring risk.

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7
Q

What are the objectives of Project Risk Management?

A
  • Maximizing the probability and impact of positive events (opportunities)
  • Minimizing the probability and impact of negative events (threats)
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8
Q

What happens to Risk and Uncertainty as a project progresses?

A

Risk and Uncertainty decrease but the cost of changes increases.

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9
Q

What is a Risk Management Plan?

A

A component of the project management plan that describes how risk management activities will be structured and performed.

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10
Q

What elements may be included in a Risk Management Plan? (5)

A
  1. Risk Strategy
  2. Methodology
  3. Roles and Responsibilities
  4. Funding
  5. Time
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11
Q

What is Risk Breakdown Structure (RBS)?

A

A hierarchical representation of potential sources of risk, useful for identifying and categorizing risks.

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12
Q

Define Stakeholder Risk Appetite.

A

The degree of uncertainty an entity is willing to take on in anticipation of a reward.

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13
Q

What is Risk Tolerance?

A

The degree, amount, or volume of risk that an organization will withstand.

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14
Q

What is a Risk Threshold?

A

Measures the level of uncertainty or impact at which a stakeholder may have specific interest.

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15
Q

What is the purpose of identifying risks?

A

To document existing individual project risks and the sources of overall project risk, enabling appropriate responses.

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16
Q

What techniques can be used to identify risks?

A
  • Expert Judgment
  • Data Gathering
  • Brainstorming
  • Checklists
  • Interviewing
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17
Q

What is Root Cause Analysis?

A

A technique used to discover essential causes that lead to a problem and develop preventive actions.

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18
Q

What is a Risk Register?

A

A document capturing details of identified individual project risks, including risk owners and potential risk responses.

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19
Q

What is the key benefit of performing Qualitative Risk Analysis?

A

It focuses efforts on high-priority risks by assessing their probability of occurrence and impact.

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20
Q

How is Risk Score calculated?

A

Risk Score = Probability * Impact Score.

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21
Q

What does Risk Data Quality Assessment evaluate?

A

The degree to which the data is useful to risk management, including accuracy and reliability.

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22
Q

True or False: Risk Probability and Impact definitions are universal across all projects.

A

False. They are specific to the project context and reflect the risk appetite and thresholds of the organization.

23
Q

What is the importance of data quality in risk management?

A

Low-quality risk data may lead to a qualitative risk analysis that is of little use to the project.

High-quality data is essential for accurate risk assessment and management.

24
Q

What are the key components of performing qualitative risk analysis?

A

Tools & Techniques include:
* Risk Probability Assessment
* Risk Impact Assessment
* Probability and Impact Scale

These tools help in evaluating the likelihood and potential impact of risks.

25
Q

What does ‘P’ and ‘I’ stand for in risk assessment?

A

‘P’ stands for Probability and ‘I’ stands for Impact.

These metrics are used to assess the likelihood of risks and their potential effects.

26
Q

Fill in the blank: Urgency refers to responses that are to be implemented in a __________.

A

timely fashion.

27
Q

What is the significance of detectability in risk management?

A

Ease of detection of the result of the risk.

It helps in understanding how quickly a risk can be identified.

28
Q

What are the categories of risk in project management?

A

Risk categories include:
* Technical risk
* Management risk
* External risk
* Commercial risk

Categorizing risks aids in better management and response planning.

29
Q

What does RBS stand for in risk management?

A

Risk Breakdown Structure.

RBS helps in categorizing risks based on project phases and other criteria.

30
Q

What is the purpose of a probability and impact matrix?

A

It helps in prioritizing risks and determining response strategies.

Opportunities and threats can be handled in the same matrix.

31
Q

True or False: Performing Quantitative Risk Analysis is required for all projects.

A

False.

It is not required for all projects but is essential for large or complex projects.

32
Q

What is the key benefit of performing quantitative risk analysis?

A

It quantifies overall project risk exposure and provides additional quantitative risk information.

This information supports risk response planning.

33
Q

What are the modeling techniques used in quantitative risk analysis?

A

Modeling techniques include:
* Monte Carlo simulation
* Decision Tree Analysis

These techniques help in evaluating the impact of risks on project objectives.

34
Q

Fill in the blank: Expected Monetary Value (EMV) = __________.

A

Probability * Impact.

35
Q

What does the risk report contain?

A

It includes:
* Assessment of overall project risk exposure
* Prioritized list of individual project risks
* Recommended risk responses

The risk report is crucial for understanding and managing project risks.

36
Q

What does the term ‘escalate’ refer to in risk response planning?

A

It refers to raising the issue to higher management for further action.

Escalation is a strategy used when risks exceed the project manager’s authority.

37
Q

What is the process of Plan Risk Responses aimed at?

A

Developing options, selecting strategies, and agreeing on actions to address overall project risk exposure and treat individual project risks.

This ensures proactive management of potential project risks.

38
Q

What is the purpose of a Risk Management Plan?

A

To outline how risk management activities will be conducted throughout the project

This includes identifying, analyzing, and responding to project risks.

39
Q

What is a key output of the Plan Risk Responses process?

A

Project documents updates

Includes updates to the risk register, risk reports, and lessons learned register.

40
Q

Name one strategy for addressing threats in risk management.

A

Accept

Acceptance involves acknowledging the existence of a threat without taking proactive actions.

41
Q

What does it mean to escalate a risk?

A

To refer a risk to higher authority when it exceeds the project manager’s authority

Escalation is appropriate when the risk is outside the project’s scope.

42
Q

Fill in the blank: Risk _______ involves eliminating the threat or protecting the project from its impact.

A

Avoidance

43
Q

What does risk transfer involve?

A

Shifting ownership of a threat to a third party

Examples include insurance, performance bonds, and warranties.

44
Q

What is the purpose of risk mitigation?

A

To reduce the probability of occurrence or impact of a risk

This may involve actions like conducting more tests or choosing a more stable seller.

45
Q

True or False: Risk acceptance can be either active or passive.

A

True

Active acceptance involves establishing a contingency reserve, while passive acceptance involves periodic reviews.

46
Q

What is a Contingent Response Strategy?

A

A response plan that deals with events that may or may not occur

Implemented when the contingency plan fails or is not fully effective.

47
Q

What is the difference between a Contingency Plan and a Fallback Plan?

A

A Contingency Plan is for potential events, while a Fallback Plan is implemented if the initial plan fails

Both are strategies in risk management.

48
Q

What does risk exploitation involve?

A

Adding high-benefit elements of scope to a project to increase value

It aims to enhance project outcomes when overall project risk is positive.

49
Q

What might trigger a change request during risk response implementation?

A

Changes to cost and schedule baselines

These changes arise from adjustments needed in the project management plan.

50
Q

What is the purpose of monitoring risks?

A

To track the implementation of risk response plans and evaluate their effectiveness

This helps in making informed project decisions based on current risk exposure.

51
Q

Fill in the blank: Risk management updates include changes to the _______ management plan.

A

Schedule

52
Q

What does the term ‘Work Performance Information’ refer to?

A

Data that supports project decision-making

Includes logs and registers that track assumptions, issues, lessons learned, and risks.

53
Q

What is the role of audits in risk management?

A

To assess the effectiveness of the risk management process

Audits should be performed at a frequency defined in the project’s risk management plan.

54
Q

What is meant by risk breakdown structure?

A

A hierarchical decomposition of risks

It provides a structured approach to identifying and analyzing project risks.

Construction Project Management (CPM) (2 decks)

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