Risk

If a business venture has a 60 percent chance to earn $2 million, and a 20 percent chance to lose $1.5 million, what is the expected monetary value of the venture? a. -$50,000 b. $300,000 c. $500,000 d. $900,000

$900,000 pmbk 339

If the probability event 1 is 80 percent and of event 2 is 70 percent, and they are independent events, how likely is it that both events will occur? a. 6 percent b. 15 percent c. 24 percent d. 56 percent

56 percent pmbk 331-332

Assume that you are working on a new product for your firm. Your CEO learned that a competitor was about to launch a new product that has similar features to those of your project. the competitor plans to launch the product on September 1. It is now March 1. Your schedule called for you to launch your product on December 1. your CEO now has mandated that you fast rack your project so you can launch your product on August 1. This fast track schedule is an example of an a. Unknown risk b. A risk taken to achieve a reward c. A response that requires sharing the risk d. A passive avoidance strategy.

A risk taken to achieve a reward pmbk 345

A risk response strategy that can be sued for both threats and opportunities is: a. Share B. Avoid c. Accept D.Transfer

Accept: pmbok 345-346

Each one of the following statements about risk avoidance is true EXCEPT that it. a. Focuses on changing the project management plan to eliminate entirely the threat. b. Isolates the project's objectives from the risk's impact c. Accepts the consequences of the risk event should it occur d. Changes the project objective that is in jeopardy.

Accepts the consequences of the risk event should it occur. pmbk 344-345

You are managing the construction of a highly sophisticated data center in Port Moresby, Papua, New Guinea. Although this location offers significant economic advantages, the threat of typhoons has caused you to create a backup plan to operate in Manila incase the center is flooded. This plan is an example of what type of risk response? a. Passive avoidance b. Mitigation c. Active acceptance d. Deflection

Active acceptance pmbk 345

A workaround is a. An unplanned response to a negative risk event. b. A plan of action to follow when something unexpected occurs. c. A specific response to a certain type of risk as described in the risk management plan d. A proactive, planned method of responding to risks.

An unplanned response to a negative risk event. pmbk 567

A general contingency is used for a. Risks that are identified at the outset of the project. b. Risks that are not identified ad the outset of the project but are know before they occur. c. Risks that cannot be known before they occur because they are external risks, d. Any risks that cannot be known before they occur.

Any risks that cannot be known before they occur. pmbk 310, 346, 348, 533

The purpose of a numeric scale in risk management is to a. Avoid high-impact risks b. Assign a relative value to the impact on project objectives if the risk in question occurs. c. Rank order of risks in terms of very low, low, moderate, high, and very high d. Test project assumptions.

Assign a relative value to the impact on project objectives if the risk in question occurs. pmbk 331-332

You are the project manager for the construction of an incinerator to burn refuse. Local residents and environmental groups are opposed to this project. Management agrees to move this project to a different location. This is an example of which one of the following risk response? a. Passive acceptance b. Active acceptance c. Mitigation d Avoidance

Avoidance pmbk 344

You are working on identifying possible risks to your project to develop a nutritional supplement. You want to develop a comprehensive list of risks that can be addressed later through qualitative and quantitative risk analysis. An information gathering technique used to identify risks is a. Documentation reviews b. Probability and impact analysis c. Checklist analysis d. Brainstorming

Brainstorming. pmbk 324

Accurate and unbiased data are essential for perform qualitative risk analysis. Which one of the following should you use to examine the extent of understanding of project risk? a. Data quality assessment b. Project assumptions testing. c. Sensitivity analysis d. Influence diagrams

Data quality assessment pmbk 332

Contingency planning involves a. Defining the steps to be taken if an identified risk even should occur. b. Establishi9ng a management reserve to cover unplanned expenditures. c. Preparing a stand-alone document that is separate from the overall project plan d. Determining needed adjustments to make during the implementation phase of a project.

Defining the steps to be taken if an identified risk even should occur. pmbk 346

On a typical project, when are risks highest and impacts (amount at stake) lowest? a. During the concept phase, b. At or near completion of the project. c. During the implementation phase d. When the project manager is replaced.

During the concept phase, pmbk 40

Which of the following is NOT an objective of a risk audit? a. Confirming that risk management has been practiced throughout the project life cycle. b. Confirming that the project is well managed and that the risks are being controlled. c. Evaluating the effectiveness of risk responses in dealing with identified risks. d. Ensuring that each risk identified and deemed critical has a computed expected value.

Ensuring that each risk identified and deemed critical has a computed expected value. pmbk 351

Assigning more talented resources to the project to reduce time to completion or to provide better quality than originally planned are examples of which one of the following strategies? a. Enhance b. Exploit c. Share d. Contingent response

Exploit pmbk 345

The primary advantage of using decision-tree analysis in project risk management is that it a. considers the attitude of the decision maker toward risk. b. Forces consideration of the probability of each outcome c. Helps to identify and postulate risk scenarios for the project d. Shows how risks can occur in combination

Forces consideration of the probability of each outcome pmbk 339

A recent earned value analysis shows that your project is 20 percent complete, the CPI is 0.67, and the SPI is 0.87 In this situation, you should a. Perform additional resource planning, add resources, and use overtime as needed to accomplish the same amount of budgeted work. b. Rebaseline the schedule, then use Monte Carlo analysis c. Conduct a risk response audit to help control risk. d. Forecast potential deviation of the project at completion from cost and schedule targets.

Forecast potential deviation of the project at completion from cost and schedule targets. pmbk 352

The project scope statement should be used in the identify risk process because it a. Identifies project assumptions b. Identifies all the work that must be done and, therefore, includes all the risks on the project. c. Helps to organize all the work that must be done on the project. d. Contains information on risks from prior project.s

Identifies project assumptions pmbk 322

The highest risk impact generally occurs during which one of the following project life-cycle phases? a. Concept and planning b. Planning and implementation c. Implementation and closeout d. Concept and closeout.

Implementation and closeout pmbk 40

Which one of the following statements best characterizes an activity cost of duration estimate developed with a limited amount of information? a. It should be part of the planning for the needed management reserve. b. It is an input to identify risks c. It is an output from identify risks. d. It must be factored into the list of prioritized project risks.

It is an input to identify risks pmbk 321-322

Most statistical simulations of budgets, schedules, and resource allocations use which one of the following approaches? a. PERT b. Decision-tree analysis c. Present value analysis d. Monte Carlo analysis

Monte Carlo analysis pmbk 340

Which of the following is an example of recommended corrective action in risk management? a. Conducting a risk audit b. Engaging in additional risk response planning. c. Performing the contingency plan d. Conducting a risk review

Performing the contingency plan pmbk 353

Your project is using complex, unproven technology. Your team conducted a brainstorming session to identify risks. Poor allocation of project resources was the number one risk. This risk was placed on the risk register, which included at this point a a. Watch list b. Potential risk response c. Known unknown d. List of other risks requiring additional analysis

Potential risk response. pmbk 327

Risk score measures the a. Variability of the estimate b. Product of the probability and impact of the risk c. Range of schedule and cost outcomes d. Reduced monetary value of the risk event.

Product of the probability and impact of the risk pmbk 332

As project manager, you have assembled the team to prepare a comprehensive list of project risks. Which one of the following documents would be the most helpful in this process? a. OBS b. WBS c. RBS d. CBS

RBS. pmbk 317 and 332

The Delphi technique is a particularly useful method for identifying risks to a. Present a sequence of decision choices graphically to decision makers b. Define the probability of occurrence of specific variables. c. Reduce bias in the analysis and keep any one person from having undue influence on the outcome. d. Help take into account the attitude of the decision maker toward risk.

Reduce bias in the analysis and keep any one person from having undue influence on the outcome. pmbk 324

Risk mitigation involves a. Using performance and payment bonds b. Eliminating a specific threat by eliminating the cause c. Avoiding the schedule risk inherent in the project d. Reducing the probability and/or impact of an adverse risk event to an acceptable threshold.

Reducing the probability and/or impact of an adverse risk event to an acceptable threshold. pmbk 345

What is the primary difference between a risk audit and a risk reassessment? a. A risk reassessment is conducted at the completion of a major phase; audits are conducted after the project is complete. b. Project stakeholders conduct risk audits, management conducts reassessments. c. Risk reassessments are regularly scheduled; risk audits are performed as defined in the project's risk management plan. d. There is no difference, they are virtually the same.

Risk reassessments are regularly scheduled; risk audits are performed as defined in the project's risk management plan. pmbk 351

Two key inputs to the perform quantitative risk analysis process are the a. WBS and milestone list b. Scope management plan and process improvement plan c. Schedule management plan and cost management plan d. Procurement management plan and quality baseline.

Schedule management plan and cost management plan pmbk 335

A project health check identified a risk that your project would not be completed on time. As a result, you are quantifying the project's risk exposure and determining what cost and schedule contingency reserves might be needed. You performed a schedule risk analysis using using Monte Carlo analysis. The basis for your schedule risk analysis is the A. WBS b. Gantt chart c. Schedule network diagram and duration estimates d. probability/impact risk rating matrix.

Schedule network diagram and duration estimates. pmbk 340

The simplest form of quantitative risk analysis and modeling techniques is a. Probability analysis Sensitivity analysis Delphi technique Utility theory

Sensitivity analysis. pmbk 338

You are developing radio frequency (RF) technology that will improve overnigh package delivery. You ask each stakeholder to estimate the most optimistic package delivery time using the RF technology, the most pessimistic time, and the most likely time. This shows that for your next step you plan to a. Use a beta or triangular probability distribution b. Conduct a sensitivity analysis c. Structure a decision analysis as a decision tree. d. Determine the strategy for risk response.

Use a beta or triangular probability distribution pmbk 336-337

As head of the project management office, you need to focus on those items where risk responses can lead to better project outcomes. One way to help you make these decisions is to a. Use a probability and impact matrix b. Assess trends in perform quantitative risk analysis results. c. Prioritize risks and conditions. d. Assess trends in perform qualitative risk analysis results.

Use a probability and impact matrix pmbk 331-332

Your project team has identified all the risks on the project and has categorized them as high, medium, and low. the "low" risks are placed on which one of the following for monitoring? a. Threat list. b. low risk list. c. Watch list d. Low impact list

Watch list pmbk 347

When managing current project, it is important to use lessons learned from previous projects to improve the organization's project management process. Therefore, in project closing procedures, it is important to review th a. Secondary risks that occurred b. checklists for identify risks c. WBS dictionary d. Fallback plan

checklists for identify risks pmbk 325

The risk urgency assessment is a tool and technique used for a. plan risk responses b. identify risks c. perform qualitative risk analysis d. perform quantitative risk analysis

perform qualitative risk analysis pmbk 333

projects are particularly susceptible to risk because a. Murphy's law states that "If something can go worng, it will." b. There is uncertainty in all projects c. Project management tools are generally unavailable at the project team level. d. There are never enough resources to do the job.

there is uncertainty in all projects. pmbk 3 and 310