Risk Response Planning

Question 1

While the risk management team is in the project execution stage, a risk response plan is implemented after predetermined conditions that have been documented occur, indicating the need for a response.  A contingency plan proves ineffective.  What should the risk management team do NEXT?
A.	Implement a contingency strategy
B.	Accept the result
C.	Develop a new response
D.	Implement a fallback plan

Answer 1

D. A fallback plan is a planned response that is implemented after all other planned responses prove ineffective. Option A is incorrect since a contingency strategy (response plan) has already been used.

Question 2

Over past three years, the facility where important project equipment is stored has experienced an increase in theft. One month after the project began, a critical piece of production equipment was stolen and cost the project team $100,000 for replacement. What should have been done to prepare for this risk?
A. Purchased insurance
B. Planned for a reserve to cover replacement costs
C. Installed a security camera
D. Moved the equipment to a safer location

Answer 2

A. It would be a better option to transfer the risk to another organization. Option C only reduces the probability of the theft by an unknown amount and therefore this is not the best solution.

Question 3

Changing the project schedule to deal with positive risk is an example of which risk response plan?
A.	Avoid
B.	Exploit
C.	Mitigate
D.	Enhance

Answer 3

B. Exploit is similar to the “avoid” strategy that is to eliminate the uncertainty of a risk. For this case, we are eliminating the uncertainty by altering the project schedule to ensure the positive risk occurs.

Question 4

A project manager has decided to recommend reducing the impact of a risk in response to a negative risk that could not be eliminated.  What is this strategy?
A.	Avoid
B.	Enhance
C.	Passive acceptance
D.	Mitigate

Answer 4

D. Reducing the impact and / or probability of a risk in response to a negative risk is an example of mitigating it.

Question 5

Which of the following is an example of exploiting a risk?
A. Starting a joint venture with a production company
B. Adding an experience resource to complete an activity faster
C. Performing additional testing to increase the probability and impact
D. Put aside a reserve fund to manage the risk

Answer 5

B. Adding an experience resource is often a way to expedite an activity or improve the quality. However, this would normally involve higher costs.

Question 6

A few days before the project execution, the risk management team found a positive risk that could decrease the project costs by 35%.  However, making the risk to occur would increase the current project costs by 10%.  It would be in the project’s best interest to:
A.	Share the risk
B.	Mitigate the risk
C.	Exploit the risk
D.	Accept the risk

Answer 6

C. The savings from the positive risk exceeds the cost. Therefore it would be best for the project to ensure the risk happens, which would be the exploit strategy.

Question 7

Changing the project schedule to deal with negative risk is an example of which risk response plan?
A.	Transfer 
B.	Mitigate 
C.	Exploit 
D.	Avoid

Answer 7

D. Changing a plan to eliminate a risk is the “avoid” strategy.

Question 8

Which of the following is NOT used in developing a risk response?
A.	The contingency strategy
B.	Documented potential responses
C.	The risk rating
D.	Root causes of risk

Answer 8

A. The contingency strategy is used as a technique during the development of a risk response and not an input.

Question 9

Which of the following is an example of mitigating a risk?
A.	Purchase insurance
B.	Develop a partnership
C.	Build a prototype
D.	Change the project schedule

Answer 9

C. Build a prototype is mitigating a risk by reducing the probability and / or impact of a risk. Option A is transfer strategy; option B is share strategy; and option D is avoid strategy.

Question 10

Two months after the execution of a project work had started, a new risk was found.  After assessing the risk, it was determined that responding to the risk would be more costly than allowing the risk to follow its own course.  A reserve was set aside to deal with the result of the risk, if it were to occur.  What strategy was implemented?
A.	Transfer
B.	Passive acceptance
C.	Avoid 
D.	Active acceptance

Answer 10

D. In this scenario, it was decided to accept the risk. However, a reserve is set aside to deal with the risk if it were to occur, which is an active acceptance strategy.

Question 11

Which of the following is NOT utilized from within the risk management plan for risk responses planning purposes?
A.	Roles and responsibilities
B.	Report formats
C.	Time and budget contingencies
D.	Risk thresholds

Answer 11

B. After the risk management plan is created, it is used as an input to the remaining five risk management processes. Risk response planning uses all of the options listed except B – reporting formats. In addition, the process also utilizes risk analysis definitions.

Question 12

All of the following are examples of transfer as a risk response strategy EXCEPT:
A.	Prototypes 
B.	Guaranties 
C.	Warranties 
D.	Bonds

Answer 12

A. Options B, C, and D are common type of transfer which is also known as purchasing insurance. All these methods are transferring risks to third party.

Question 13

A project manager of a mid-size project uncovered a risk that, if it were to happen, could shorten the length of the project by 3 months.  This is a saving of $120,000 for the project.  All the stakeholders agreed that anything within reason should be done to make sure that this risk occurs.  What risk responses strategy is the project manager most likely to use? 
A.	Share 
B.	Enhance
C.	Active acceptance
D.	Exploit

Answer 13

D. Exploit strategy is used by a project team when the interest is to make sure the risk occurs, as well as increasing the impact of the positive risk.

Question 14

Which of the following response strategy should a project manager be using to increase the probability that a positive event will occur, and / or to increase the impact of the positive event?
A.	Mitigate 
B.	Exploit 
C.	Enhance 
D.	Share

Answer 14

C. Enhance is used to in handling positive risks when the project organization wants to increase the probability and / or impact of the risk.

Question 15

A project manager was told by his team members that the initial planned response for a particular risk had proved ineffective.  The stakeholders had given the project manager authority to make decisions regarding risk responses.  What should the project manager do NEXT?
A.	Accept the outcome
B.	Implement a fallback plan
C.	Implement the planned response
D.	Implement a contingency plan

Answer 15

B. Fallback plans are planned responses that are executed when the initial planned response proves not effective.

Question 16

Beaming Light is a high-end lighting store chain.  The company is in the process of developing a new energy-saving lighting system for release in eight months.  The project manager leading the development of the new lighting system is currently developing risk responses, along with the risk management team.  In response to one of the threats, insurance was purchased to cover any potential losses, should the risk emerge.  What type of risk response did the team utilize?
A.	Avoid 
B.	Transfer
C.	Mitigate 
D.	Passive Acceptance

Answer 16

B. Transfer literally involves the transfer of a risk to third party. Insurance is one example of transfer.

Question 17

Which of the following statements BEST describes mitigation of a risk?
A. To remove the possibility of a risk occurring
B. To transfer a risk to a third party
C. To decrease the probability and / or impact of a risk
D. To increase the probability and / or impact of a risk

Answer 17

C. Option A is avoid, option B is transfer, and option D is enhance. Therefore the correct is option C.

Question 18

A project manager and the risk management team had just exhausted all potential scenarios of dealing with a particular risk.  It was confirmed that it was not possible to eliminate the risk.   Further to that, the team had found the possibility of reducing the risk was also minimal.  Finally, the risk management team, with the approval of project stakeholders, decided to do nothing about the risk.  What strategy did the risk management team take in dealing with the risk?
A.	Mitigate 
B.	Active acceptance
C.	Avoid 
D.	Passive acceptance

Answer 18

D. Passive acceptance is when doing nothing about the risk; active acceptance, on the other hand, is where a contingency reserve of time, fund or resources are set aside to deal with the risk it is occurs.

Question 19

19)	Which of the following will be triggered when pre-defined risk warning signs occur?
A.	Contingency response plan
B.	Active acceptance
C.	Passive acceptance
D.	Fallback plan

Answer 19

A. Contingency response plan is created for certain risks where this response can be developed in advance. The contingency response plan is executed when pre-defined risk triggers (warning signs or symptoms) occur.

Question 20

20) Which of the following will NOT be updated to the risk register as a result of carrying out the risk response planning process?
A. Actual outcome of risk responses
B. Fallback plan
C. Risk owners and assigned responsibilities
D. Agreed upon risk response strategies

Answer 20

A. Outcomes of risk responses are only added to the risk register as part of the Risk Monitoring and Control process.

Question 21

A project manager is creating a risk response plan. However, every time a risk response is suggested, another risk is identified that is caused by the response. Which of the following is the BEST thing for the project manager to do?
A. Make sure all stakeholders understand the project work better
B. Spend more time to make sure the risk responses are clearly defined
C. Include more people in the Identify Risk process, since risks have been missed out
D. Document the new risks and continue the Plan Risk Response process

Answer 21

D. Option D describes secondary risks. Identifying secondary risks is expected while completing the Plan Risk Response process.

Question 22

While preparing risk responses, the project manager identifies additional risks. What should the project manager do?
A. Document the risk items, and calculate the expected monetary value based on probability and impact that result from the occurrences.
B. Add reserves to the project to accommodate the new risks and notify management
C. Determine the risk events and the associated cost, then add the cost as a reserve to the project budget
D. Add a 20% contingency to the project budget and notify the client

Answer 22

A. A newly identified risk should go through all the risk management process. Option B is not the best choice as the probability and impact of the risk is not determined. Option C only addresses the cost impact, when there could also be time impact. Option D is not the best choice as detailed analysis is required to determine reserve (given 20% contingency). Thus, option A is the best choice.

Question 23

23)	Which of the following are risk response strategies for opportunities?
A.	Enhance, avoid, transfer
B.	Share, accept, enhance
C.	Exploit, mitigate, share
D.	Mitigate, exploit, accept

Answer 23

B. The correct answer is option B – where enhance, share and accept are all response strategies for opportunities.

Question 24

Outputs of Plan Risk Responses process include:
A. Risk triggers, contracts, and a risk list
B. Secondary risks, process updates, and risk owners
C. Residual risks, fallback plans, and contingency reserves
D. Contingency plans, project management plan updates, and change requests

Answer 24

C. Option A – risk list; option B – process updates; and option D – change requests are not outputs of Plan Risk Responses process. Only option A has all outputs of Plan Risk Responses process.

Question 25

During the Plan Risk management process, your team has come up with 618 risks and 23 roots causes of those risks. You are at the last phase of the three years long project that the team has worked on together. The management and sponsor are very supportive, and a lot of time was put in to ensure the project work was complete and sign off by all stakeholders. During the project planning, the team cannot come up with an effective way to mitigate or insure again a risk. It is not work that can be outsourced, nor can it be removed. What would be the BEST solution?
A. Continue to investigate ways to mitigate the risk
B. Find ways to avoid the risk
C. Find ways to transfer the risk
D. Accept the risk

Answer 25

D. Since you cannot remove the work to “avoid” it (option B); nor can you insure / outsource (“transfer” – option C) or mitigate (option A); we left option D as the best choice.

Question 26

Which of the following statements is an avoid strategy?
A. Outsource a work package so as to gain an opportunity
B. Notify management that there could be a cost increase if a risk occurs because no action is being taken to prevent the risk
C. Provide a team member who has limited experience with additional training
D. Remove a troublesome resource from the project

Answer 26

D. Option A is “Share” strategy. Option B is “Accept” strategy. Option C is mitigate strategy which is to mitigate the probability. Hence, the best choice is option D.

Question 27

Which of the following BEST describes avoidance of a risk during the Plan Risk Response process?
A. Assigning the risk to someone else
B. Reducing the probability of occurrence and its impact
C. Simply do nothing and just let the risk occurs
D. Eliminate the threat of a risk by eliminating the cause of the risk

Answer 27

D. Avoidance doesn’t mean ignore. It means eliminate (option D). Option A is transferring the risk; while option B refers to mitigation.

Question 28

Which of the following is generally NOT an output of the Plan Risk Responses process?
A.	Residual risks
B.	Secondary risks
C.	Data precision ranking
D.	A revised project management plan

Answer 28

C. Option C is done during Perform Qualitative Risk Analysis process.

Question 29

A contingency plan is different than a fallback plan in that a fallback plan:
A. Is created before a contingency plan
B. Will be managed by the project manager while the contingency plan is managed by the risk owner
C. Is implemented after a contingency plan
D. Will require management approval, while the contingency plan does not

Answer 29

C. You will need the contingency plan to be created and take place before a fallback plan, so option A is not the best choice. All plans are managed by project manager so option B is wrong. All plans require management approval, so option D is wrong too.

Question 30

Which of the following statements is an enhance strategy?
A. Begin negotiation for the equipment earlier than planned so as to secure a lower price
B. Remove a work package / activity from the project
C. Assign a team member to visit the seller’s manufacturing plant frequently to learn about a problem with delivery as early as possible
D. Move a work package to a date when a more experience resource is available to be assigned to the project

Answer 30

A. Option is “avoid” strategy. Option C is “mitigate” strategy which is to mitigate the impact. Option D is “exploit” strategy which is to exploit the availability of the more experience resource. Option A is “enhance” strategy which is to increase the impact (lowering the price).