Risk RMP Definitions

A project is facing the following risks: 20 percent chance a part is not available, creating an additional fee of US $30,000; 10 percent chance the team requires additional training for a cost of US $12,000; 25 percent chance the second planned quality test costing US $8,000 is unnecessary. What is the expected monetary value of these risks?

$5,200

A project has the following risks: 20 percent probability of a 14 day delay in the receipt of customer requirements; 10 percent probability of a 21 day delay in the procurement process; 50 percent probability the integration will take 14 days longer than planned. What is the expected monetary value of these events?

11.9 days

An experienced project manager has just begun working for a large information technology integrator. Her manager provides her with a draft project charter and immediately asks her to provide an analysis of the risks on the project. Which of the following would BEST help in this effort?

A conversation with a team member from a similar project that failed in the past

Risk Management department

A department that supplies policies and assistance with project risk management efforts

PMO

A department that supports project management within an organization

Network diagram

A dependency sequenced organization of the project's activities

A project manager has just completed subjectively evaluating risks on the project. Which of the following is the MOST important output of this process?

A determination of which risks to process further and which to simply document

Work breakdown structure

A diagram that shows the decomposition of the project into smaller more manageable pieces

Project scope statement

A document that describes the approved product and project requirements

Procurement management

A formal or informal plan that describes what part of the project will be purchased under contract or purchase order; it includes a plan for managing the sellers

Communications management plan

A formal plan documenting how and in what form communications will be handled on the project

Human resource plan

A formal plan for when and how resources will be involved in the project, and what roles they will perform

Risk management plan

A plan for how risk management will be done on a project; who should be involved, when risk management activities should be done, and how frequently they should be done

You have just been assigned as the project manager for a sizeable engineering project, and you want to quickly review the project's procedures for managing risk. What would be the MOST helpful in finding this information?

A risk management plan

Business Risk

A risk of gain or loss

Pure (insurable) risk

A risk of loss

Definitions of probability and impact

A standardized interpretation of the numbering system used to evaluate risks

Risk Management Process

A systematic and proactive approach to taking control of projects by under standing or decreasing the uncertainties

After identifying a risk to your project, you determine there is a high probability of the risk occurring with a low consequence. What mitigation strategy is BEST to adopt?

Add the risk to the watch list.

A project manager has just finished the risk response plan for a US $387,000 engineering project. Which of the following should he probably do NEXT?

Add work packages to the project work breakdown structure.

Budget

Amount of resources allocated to be spent on the project

Risk thresholds

Amounts of risk the company and key stakeholders are willing to accept

Which of the following is the BEST way to describe the outputs of the Identify Risks process?

An understanding of the project risks

Estimates for time and costs

Anticipated time or cost of project activities

Project constraints

Anything that limits the team's options, e.g., scope time, cost, quality, risk, resources, and customer satisfaction

Risk tolerance areas

Areas in which the company and key stakeholders are willing to accept risk

Historical records

Company policies , procedures , templates, and historical information

Organizational process assets

Company policies, procedures, templates, and historical information

Workarounds are determined during which risk management process?

Control Risks

Your project team has identified a major project risk. After talking to the project management office, they determine that a reserve on the project is not necessary. What is the NEXT step?

Create a risk response plan that includes the risk.

The risk information on the project must be analyzed to determine how accurate and well understood it is, and whether more research is needed before a qualitative assessment can be done. It is MOST important to complete which of the following?

Data quality assessment

Which of the following risk events is MOST likely to interfere with attaining a project's schedule objective?

Delays in obtaining required approvals

Plan Risk Management Process

Determining how risk management will be done on the project, who will be involved, and procedures to be used

Plan Risk Management process

Determining how risk management will be done on the project, who will be involved, and procedures to be followed

Identify Risks process

Determining specific risks by project and by activity

Plan Risk Response process

Determining what can be done to reduce the overall risk of the project by decreasing the probability and impact of the threats and increasing the probability and impact of opportunities

Which of the following MUST be an agenda item at all team meetings?

Discussion of project risks

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?

Document the new risks and continue the Plan Risk Responses process.

What should be done with risks on the watch list?

Document them and revisit them during project monitoring and controlling.

In response to an identified risk, the project manager meets with the team and management to develop a strategy. After discussions, they decide it would be best to make sure the risk definitely happens. This is an example of which risk response strategy?

Enhance

If a risk event has a 90 percent chance of occurring, and the consequences will be US $10,000, what does US $9,000 represent?

Expected monetary value

Which of the following is a chief characteristic of the Delphi technique?

Expert opinion

Monte Carlo analysis is used to

Get an indication of the risk involved in the project.

Project Charter

High level directive from sponsor outlining the overall objectives of the project, it authorizes the existence of a project

Tracking

How records of risks will be documented for the benefit of the current project and future projects

Methodology

How risk will be handled on the project and what data and tools will be used

Reporting formats

How the results of risk management will be documented and communicated

Monitor and Control Risks process

Implementing the risk response plan as risks occur, looking for risk triggering, identifying new risks, and evaluating the effectiveness of risk responses

Stakeholder register

Information about individuals and organizations who are actively involved in the project or who may affect or be affected by the project

Project background information

Information from before the project was approved , articles written about similar projects , and other such information

Project Management Process

Initiating , planning, executing, monitoring and controlling, closing

All of the following are factors in the assessment of project risk EXCEPT:

Insurance premiums.

A project manager analyzed a US $200,000 project that involves 30 team members and has three customers. Why is there a need for an analysis of secondary risks on this project?

It helps determine and address new risks created as a result of the risk response strategies chosen.

Which of the following is a TRUE statement about a risk rating matrix?

It should be standardized between projects.

According to the project manager's earned value (EV) analysis of a software development project on June first, the cost performance index (CPI) computes to 1.0 and the schedule variance (SV) is zero. On June third, the banks of the nearby river overflow and flood the development computer room, shutting down all operations for two weeks. This project has been struck by a(n):

Known unknown risk.

Your team has discovered a high probability that the equipment you are developing will not perform under the pressure it needs to in the workplace. In order to handle this risk, you have chosen to prototype the equipment. This is an example of risk:

Mitigation.

Which of the following helps determine the probability of completing the project on any specific day?

Monte Carlo analysis

During the Identify Risks process, a project manager and stakeholders used various methods to identify risks and then created a long list of those risks. The project manager then made sure all the risks were understood and that triggers had been identified. Later, in the Plan Risk Responses process, he took all the risks identified by the stakeholders and determined ways to mitigate them. What has he done wrong?

More people should have been involved in the Plan Risk Responses process

Residual risks are risks that remain after the Plan Risk Responses process. Secondary risks are:

New risks created by the risk response strategies selected.

A construction project has a work package that could result in fatalities or long term disabilities with losses of over US $2 million. The company has had a clean record in the past and has won several safety awards. An appropriate risk response strategy is to:

Not do the work package.

Perform Quantitative Risk Analysis process

Numerically analyzing the risks obtained in the Identify Risks process and analyzing the extent of overall project risk

A project has had some problems, but now seems under control. In the last few months almost all the reserve has been used up and most of the negative impacts of events that had been predicted have occurred. There are only four activities left, and two of them are on the critical path. Management now informs the project manager that it would be in the performing organization's best interest to finish the project two weeks earlier than scheduled, in order to receive an additional profit. In response, the project manager sends out a request for proposal for some work that the team was going to do, hoping to find another company that might be able to do the work faster. The project manager can BEST be said to be attempting to work with:

Opportunities.

Assuming that the ends of a range of estimates are +/- 3 sigma from the mean, which of the following range estimates involves the LEAST risk?

Optimistic = 26 days, most likely = 30 days, pessimistic = 33 days

A list of risks for additional study is an output of:

Perform Qualitative Risk Analysis.

During a voice conference, one team member suggests that a more experienced person be used on the project. Another proposes using a person with more training. Which of the following BEST describes what is being done?

Plan Risk Responses

The probabilistic analysis of the project is an input to which part of the risk management process?

Plan Risk Responses

You are in charge of a project developing a complex product that does not resemble anything your organization has done previously. You are using a resource to develop this product who is in high demand elsewhere in your organization. The project timeframe is very aggressive. In order to meet the schedule, only a limited amount of testing is done. Once the testing is completed, the resource is released. The product works fine when being tested, but in production, it performs poorly. This results in a substantial amount of rework and extra costs to reacquire the resource on an overtime basis. Which of the following BEST describes why this project had problems?

Poor risk identification

Threats

Possible events that may negatively impact a project

Opportunities

Possible events that may positively impact a project

Risks

Possible events that may positively or negatively impact a project

Risk factors

Probability, impact, expected timing, frequency of the event

Iterative

Repeated throughout the life of the project

Outputs of the Plan Risk Responses process include:

Residual risks, fallback plans, and contingency reserves.

During project executing, an accepted risk occurs, and is handled. However, the project manager notes the impact was greater than was anticipated. The BEST thing to do is to:

Revisit the Quantitative Risk Analysis process.

All the following are outputs of the Perform Qualitative Risk Analysis process EXCEPT:

Root causes of risk and prioritized list of risks.

Allocating ownership of a risk to a third party who is best able to capture the opportunity is an example of _______ the risk.

Sharing

A project manager has developed risk responses for the list of high-ranking risks created in the Perform Qualitative Risk Analysis process. She was planning to go on to the Control Risks process when she was reminded by another project manager that she forgot to do something important in the Plan Risk Responses process. Which of the following did she forget?

She has not analyzed secondary risks.

Expectations

Stakeholders' needs or intents that may be unstated, but are motivators or non motivators for working on the project

Perform Qualitative Risk Analysis process

Subjectively ana lyzing the risks obtained in the Identify Risks process and deciding which risks warrant a response; crearing a "short list" of risks

Impact

The effect on the activity or the project if the risk (threat or opportunity) occurs

Sponsor

The individual or group who authorizes the project and provides the financial resources

Customer

The individual or organization who will use the product of the project

Probability

The likelihood that a risk (threat or opportunity) will occur

All of the following are results of adding to the risk register in the Plan Risk Responses process EXCEPT:

The need for contingency reserves is minimized.

Which of the following is NOT a possible outcome of risk acceptance?

The project will recover costs from the insurance company.

Risk tolerances are determined in order to help:

The team rank the project risks.

A project team is trying to decrease risk on the project. Management has a good relationship with a seller who is experienced in areas your company is not experienced in. Management wants all activities with a US $50,000 or higher risk to be transferred to the seller. Management believes that this will remove the impact of those higher risks from the project. Why would this NOT be effective?

The transference of a risk does not remove all impacts of the risk.

All of the following statements about workarounds are correct EXCEPT:

They are responses only to risks that were identified in project planning.

Assumptions

Things that are accepted as true, but may not be true

Inputs to risk management

Things that must be done or information that must be collected before you can adequately complete risk management

Risk Team

Those helping manage the risk management process

Project team

Those who will be executing the project management plan

Purchasing insurance is BEST considered an example of risk:

Transfer.

Uncertainties

Unknowns

Risk averse

Unwilling to accept risk

A project manager gets a report from the risk owner that a risk did not occur. The project manager should then:

Update the risk response plan in the risk register.

A project manager's project has just been dropped to a lower priority on his department's prioritized list of projects. It would be BEST for the project manager to:

Use some of the management reserve to accommodate the change.

Lessons learned

What went right, wrong, or would have been done differently by past project teams if they could execute their projects again

Timing

When/how often risk management activities will be performed throughout the project

Roles and responsibilities

Who will do what on the project