Chapter 7: Managing Risk

This risk assessment tool is a variation of the risk severity matrix that includes the ease of detection for each of the identified risks. A. PERT simulation B. FMEA analysis C. Ratio/range analysis D. Probability analysis E. Semi-quantitative analysis

B

The risk associated with one of the key members being stuck by lightning would most likely be handled by which of the following? A. Mitigating B. Retaining C. Ignoring D. Transferring E. Sharing

B

What type of contingency is typically required to manage a schedule risk , i.e. finishing a project late? A. back up strategies B. budget reserves, i.e. cash C. mitigation of risk likelihood D. inflation factor adjustments

B

Which mitigation strategy is normally first pursued to minimize the cost impact of a risk event occurring? A. avoidance B. reduce likelihood C. reduce impact

B

Which of the following groups should NOT be a part of the risk identification process? A. Vendors B. All of these groups can be included in the risk identification process C. Subcontractors D. Customers E. Project team

B

Which of the following is identified to cover major unforeseen risks and, hence, are applied to the total project? A. Budget reserves B. Management reserves C. Time buffers D. Both B and C are correct E. A, B, and C are all correct

B

Which of the following would not be considered a threat? A. Inflation B. Meeting the project schedule C. International disruptions D. Economic conditions E. Competition

B

_____________ is a measure of how easy it would be to notice that a risk event was going to occur in time to take mitigating action, that is, how much warning you would have. A. Warning assessment B. Detection difficulty C. Impact scaling D. Awareness level E. Probability analysis

B

what is the benefit of a risk management plan for a project? A. preventing all project risk B. minimizing the impact of risks occurring C. creating multiple work breakdown structures D. providing flexibility for project scope development

B

A list of questions that address traditional areas of uncertainty on a project is termed a risk A. Risk profile B. Questionnaire C. Research D. Query E. Checklist

A

Adopting proven technology instead of experimental technology in order to eliminate technical failure would be an example of which risk response? A. Avoiding B. Transferring C. Mitigating D. Retaining E. Ignoring

A

In the beginning the focus of risk management should be on risks that A. Impact the whole project B. Impact the critical path C. Are known D. Have the greatest cost impact E. Have the greatest schedule impact

A

One of the keys to success in risk identification is A. Critical thinking B. Optimism C. Pessimism D. A "can do" attitude E. All of these are correct

A

The cost impact of a risk event occurring as a project proceeds through its life cycle tends to A. Slowly rise B. Drop sharply and then level out C. Rise sharply and then level out D. Remain about the same E. Slowly drop

A

The demolition of the Seattle Kingdome (Snapshot from Practice) is an example of which of the following? A. Mitigating B. Retaining C. Ignoring D. Transferring E. Sharing

A

Tools such as a risk assessment form and a risk severity matrix are used to. A. Assess risks. B. Regulate risks. C. Control risks. D. risks. E. Respond to risks.

A

What is the purpose of a contingency fund in executing a response to an opportunity (positive risk) occurring? A. to take advantage of opportunities B. to eliminate project risks C. none, it is not built into the original plan

A

Which of the following is not one of the probability analysis tools? A. Ratio/range analysis B. Decision tree C. PERT simulation D. PERT E. All of these are probability analysis tools

A

Which statement is correct with respect to transferring risk? A. transfer of risk does not change the likelihood or impact B. transfer of risk increases total cost of the risk occurring C. transferring risk infers postponement or delay of a risk occurrence

A

Funds that are for identified risks that have a low probability of occurring and that decrease as the project progresses are called ______ reserves. A. Management B. Budget C. Contingency D. Padded E. Just in case

B

The attempt to recognize and manage potential and unforeseen trouble spots that may occur when a project is implemented is known as A. Risk forecasting B. Risk management C. Contingency planning D. Scenario analysis E. Disaster protection

B

The easiest and most commonly used technique for analyzing risks is _____ analysis. A. Probability B. Scenario C. Payback D. Risk/reward E. Impact

B

After your team has successfully identified potential risks that could affect the project, what is the next step? A. Mitigate risks B. Decide how to respond to all risks C. Assess identified risks D. Create a risk breakdown structure E. Create contingency plans

C

All of the following are included in the risk identification process EXCEPT A. Customers B. Subcontractors C. Competitors D. Vendors E. None of these are included

C

An uncertain event or condition that, if it occurs, has a positive or negative effect on a project objectives is termed. A. Random chance B. A disaster C. Risk D. Hazard E. Bad luck

C

Risks are evaluated in terms of A. Time and impact. B. Cost and schedule. C. Likelihood and impact. D. Likelihood and cost. E. Impact and cost.

C

The initial step in the risk management process is to A. Determine the level of acceptable risk B. Assess the risk potential C. Identify the risks D. Set aside budget funds for managing the risks E. Appoint a risk manager

C

The risk assessment form contains all of the following EXCEPT A. Likelihood of the risk event occurring B. Potential impact of the risk event C. Who will detect the occurrence of the risk event. D. Difficulty of detecting the occurrence of the risk event E. When the risk event may occur

C

What is required in order for risk response control to succeed? A. work breakdown structure dictionary B. mitigation of risk likelihood C. documentation of responsibility

C

Where in the project life cycle should a project manager begin the risk identification process? A. scope development B. defining C. planning D. executing E. delivering

C

Which of the following is not one of the potential responses to a specific risk event? A. Mitigating B. Retaining C. Ignoring D. Transferring E. Sharing

C

Which of the following is used to review activity and project risk? A. NPV B. S-curves C. PERT D. Decision trees E. All of these can be used

C

Why is the second step of risk management to assess the risks identified in the first step? A. to determine what's missing B. to avert the risk C. to establish priorities for attention

C

which term is used to best describe the documents needed to develop an adequate risk response control plan? A. work breakdown structure B. work breakdown structure dictionary C. risk register D. project scope

C

A key distinction between a risk response and a contingency plan is A. A risk response is established only for moderate risks while contingency plans are established for major risks. B. A risk response is created by the project team and the project manager while the project manager and the customer agree on the contingency plan. C. A risk response is action that is the response to a risk once it has happened and the contingency plan is created by the customer if the risk response fails. D. A risk response is part of the actual implementation plan and action is taken before the risk can materialize, while a contingency plan goes into effect only after the risk has transpired. E. A risk response is only effective when you are able to assess the likelihood of the risk and its impact on the project; all other risks are covered by contingency planning.

D

A risk profile is a list of questions that address traditional areas of uncertainty on a project that answers developed from: A. When the event might occur in the project B. Chances of the event occurring C. Interaction with other parts of the project or with other projects D. From previous, similar projects E. Magnitude or severity of the event's impact

D

Change management systems are designed to accomplish all of the following EXCEPT A. Reflect scope changes in baseline and performance measures. B. Review, evaluate, and approve/disapprove proposed changes formally. C. Identify expected effects of proposed changes on schedule and budget. D. All of these are examples of what change management systems are designed to accomplish. E. Track all changes that are to be implemented.

D

Detailing all identified risks, including descriptions, category, and probability of occurring, impact, responses, contingency plans, owners and current status is called: A. Management reserves B. Change control C. Contingency reserves D. Risk register E. Risk profiles

D

In a generic project life cycle, which phase has the highest cost should a negative risk event occur? A. scope development B. defining C. planning D. delivering

D

One common mistake made early in the risk identification process is to A. Not all possibilities are considered B. Participants are over-optimistic C. Participants are over-pessimistic D. Focus on objectives and not on the events that could produce consequences. E. Too much attention is given to past events

D

Purchasing an accident insurance policy would be an example of responding to a risk by _____________ it. A. Mitigating B. Ignoring C. Retaining D. Transferring E. Avoiding

D

Technical risks are: A. Can often be the kind that cause the project to be shut down. B. Problematic C. Imposed duration dates D. Both A and B are correct E. A, B, and C are all correct

D

The 1999 NASA Mars Climate Orbiter is an example of A. Disaster avoidance through proactive risk management B. Murphy's Law C. Proper use of critical thinking D. Mismanaged risk control E. Using historical records to assess risk

D

Which of the following is NOT involved in risk control? A. Initiating contingency plans B. Establishing a change control system C. Watching for new risks D. Establishing contingency funds E. Executing the risk response strategy

D

Which of the following is not one of the steps in the risk management process? A. Risk response development B. Risk assessment C. Risk identification D. Risk tracking E. Risk response control

D

Which of the following is typically included in risk profiles? A. Management aspects B. Market aspects C. Technical aspects D. Both A and C are included E. A, B, and C are all included

D

_______________ focuses on how to respond to events that have a positive impact on a project. A. Risk management B. Value management C. Prospect management D. Opportunity management E. Contingency management

D

32. Change management systems are designed to accomplish all of the following EXCEPT: A. Track all changes that are to be implemented B. Review, evaluates, and approve/disapprove proposed changes formally C. Identify expected effects of proposed changes on schedule and budget D. Reflect scope changes in baseline and performance measures E. All of the above are correct

E

A Risk Response Matrix contains all of the following EXCEPT A. Contingency plan B. Trigger C. Who is responsible? D. Response E. All of these are included in the matrix

E

A fixed price contract is an example of A. Ignoring risk. B. Avoiding risk. C. Accepting risk. D. Mitigating risk. E. Transferring risk.

E

Organizations use __________ in conjunction with work breakdown structures to help management teams identify and eventually analyze risk. A. Contingency breakdown structures B. Organizational breakdown structure C. Risk assessment D. Scenario analysis E. Risk breakdown structures

E

Risks that can result in a system or process that will not work are known as A. Cost risks. B. Funding risks. C. Schedule risks. D. Unnecessary risks. E. Technical risks.

E

The chances of a risk event occurring as a project proceeds through its life cycle tends to A. Slowly rise B. Drop sharply and then level out C. Rise sharply and then level out D. Remain about the E. Slowly drop

E

The risk management tool that is divided into three color-coded zones representing major, moderate, and minor risks is the risk A. Assessment form B. Responsibility matrix C. Scenario assessment D. Impact assessment E. Risk severity matrix

E

The two scales of a risk severity matrix measure A. Time, cost B. Cost, schedule C. Impact, cost D. Time, impact E. Likelihood, impact

E

Which of the following is not included in a Failure Mode and Effects Analysis? A. Impact B. Probability C. Detection D. Risk value E. All of these are included

E