Risk, Opportunities, and Uncertainty Flashcards
Risk
An event or condition of uncertainty that, if it occurs, has a positive or negative effect on one or more project objectives.
Transfer
A strategy for managing negative risks or threats that involves shifting the impact and ownership of the risk to a third party and paying a risk premium to the party taking on the liability of the risk.
Risk Transference
A risk response strategy whereby the project team shifts the impact of a threat to a third party, together with ownership of the response.
Risk Acceptance
A risk response strategy whereby the project team decides to acknowledge the risk and not take any action unless the risk occurs.
Risk Appetite
The degree of uncertainty an organization or individual is willing to accept in anticipation of a reward.
Risk Avoidance
A risk response strategy whereby the project team acts to eliminate the threat or protect the project from its impact.
Risk Breakdown Structure (RBS)
A hierarchical representation of potential sources of risk.
Risk Categorization
Organization by sources of risk (e.g., using the RBS), the area of the project affected (e.g., using the WBS), or other useful category (e.g., project phase) to determine the areas of the project most exposed to the effects of uncertainty.
Risk Enhancement
A risk response strategy whereby the project team acts to increase the probability of occurrence or impact of an opportunity.
You are currently leading a massive project team. A number of identified project risks did occur during the project but all were successfully managed in accordance to their contingency plans. Your project is now nearing completion, but a previously unidentified risk has arisen, and it could significantly affect one of the project deliverables. What do you do?
Notify the project stakeholders immediately.
NOT Include the issue in the project risk log.
Notify the project stakeholders immediately about the new risk. Once the stakeholders have been made fully aware of the circumstances and potential impacts, a plan to deal with this risk can be developed. The PMI Code of Ethics and Professional Conduct requires project managers to provide accurate and timely project information at all times and to follow all project processes and policies. [PMI Ethics] (Domain: Business Environment, Task 1)
Halfway through the iteration, a senior team member has expressed his concern regarding a major risk. Although the probability of the risk occurrence is very low, the impact will be significant if the risk does occur. The team member has some mitigation ideas that need to be tested before being implemented. What should you do?
Organize an exploratory spike.
NOT Add the risk to your watch-list.
If the impact is significant, the risk cannot be ignored. However, since the mitigation actions need to be tested, an exploratory spike needs to be arranged. [Agile Practice Guide1 p56] (Domain: Process, Task 3)
Assumption Log
An Assumption Log is where a project manager documents key factors that are believed to be true for planning, such as resource availability and market conditions.
Scatter Diagram
A Scatter Diagram plots two variables against each other to determine if there is a correlation between them.
Name the Risk Management process steps in sequential order
The Risk Management process steps in sequential order are:
Plan Risk Management (ID risk tolerance)
Identify Risks
Perform Qualitative Risk Analysis
Perform Quantitative Risk Analysis
Plan Risk Response
Implement Risk Responses
Monitor Risks
Describe the high level difference between Qualitative and Quantitative Risk Analysis
Qualitative Risk Analysis assesses risks by likelihood and impact, providing a simpler, less costly method than Quantitative Risk Analysis, which uses complex math for detailed assessment, since it’s costly and time-consuming, it’s reserved for high-priority risks.
Describe Sensitivity Analysis
Sensitivity Analysis is the evaluation of the effect on a variable by one or more influencing variables.
Often used as a technique in monitoring risks, it serves to identify the possible impact on a given objective should one or more risks materialize.
It is a core technique of quantitative risk analysis and a supportive technique of response planning and risk monitoring.
A strength of Sensitivity Analysis is that it enables a structured approach to evaluating potential impact of risks.
A weakness of Sensitivity Analysis is that it suggests that the results are absolute because they have been given a quantified measure.
PMI Risk Management Practice Guide p126 & 132.
The project management team expects that during the course of the project there could be delays in component delivery due to strikes, changes to the permitting processes, or extensions of specific engineering durations. What analysis could be helpful in preparing contingency and response plans to mitigate these issues?
What-If scenario analysis
NOT Contingency analysis
What-If Scenario Analysis is used to assess the feasibility of the project schedule under adverse conditions. This is an analysis of the question “What if the situation represented by scenario ‘X’ happens?” It is used in preparing contingency and response plans to mitigate the impact of adverse conditions. [PMBOK7 p177] (Domain: Process, Task 6)
