CHAPTER 7 - Managing Risk
What aspects of the project change control are documented within a communication plan at the start of a project?
How stakeholders will be notified of changes and how the evaluation/decision-making process occurs.
What is key to developing a risk transfer approach to risk management?
Identify and document responsibility for absorbing the impact of the risk occurrence.
Which of the following are used by a risk assessment matrix to prioritize identified risk?
Impact and likelihood
What are the drawbacks in using insurance to transfer risk?
Insurance is often costly and it may be difficult to explain the risk and its consequences to an insurance broker.
What is the purpose of time being set up in a contingency plan?
It is set up to cover identified and or unknown risks.
What is the purpose of a budget set up in a contingency plan?
It is set up to cover identified risks
What is the purpose of management set up in a contingency plan?
It is set up to cover unknown or unidentified risks.
Which are appropriate methods for handling cost risk?
Item by item price risk analysis.
Which statement about management reserves are correct?
Management reserves are established after the budget reserves are identified.
Which response explains why monitoring risk during project execution is important?
New risks may emerge as project activities complete and people may hide problems until they become difficult to manage.
Which are potential impacts given a project with risk responses but no contingency plan?
Panic, incorrect actions taken, and delayed corrective action.
In scenario analysis, which of the following is used to assess risk?
Probability of an event and the impact of an event
Which sources of project information must be reviewed and if necessary updated/changed upon approval of a change request proposal?
Project baseline and work breakdown structure.
When assigning responsibility for responding to risk on a work package, which stakeholder should be involved in the decision making?
Project manager, person responsible for risk response, and the person responsible for the work package.
Which of the following are true while assessing risks?
Project managers have to sift through the list of risks, some risks are trivial and can be ignored and not all risks deserve attention.
Which aspects of project management require a system/process to track and control changes?
Project scope, the implementation of contingency plans, improvements suggested by team members.
Which mitigation strategy is normally first pursued to minimize the cost impact of a risk event occurring?
Reduce likelihood
Match the reason a risk is accepted-too large to be transferred
The project owner assumes the risk of an event occurring
The average project duration is
The sum of all the average activities times alone the critical path
Which statement best describes the scales used to measure or predict probability, impact, and detection?
They may vary depending on the project.
Which statement best defines the methodology for accepting project opportunities?
When the event occurs, implement increased application of resources, but don't expend any pursuing it.
Change management systems utilize what process steps?
recording, reporting, and controlling
List the steps of risk management in their proper sequence.
risk identification risk assessment risk response development risk response control
Which statement about budget reserves are correct?
tagged to specific work packages or deliverables and allocated funds deducted after work package/deliverable completed.
What are the appropriate methods for handling technical (project technology related issues) risk?
testing and assessment methods and back up or alternate plans
Which statement best defines the methodology for enhancing project opportunities?
the opposite of mitigation, i.e. take actions to increase the probability and /or impact of a positive occurrence
Identify the responses to a risk event when the risk has been identified and assessed
transfer, retain, mitigate, or avoid
Which methods may be used to transfer risk in a project?
warranties and/or guarantees, fixed price contracts or insurance
For a project task, the optimistic activity time is four hours, the pessimistic time is eight hours, and the most likely time is five hours. Calculate the weighted average activity time.
5.33 A = optimistic activity time B = pessimistic activity time M = most likely activity time
When identifying risk, a team should initially focus on what aspect of risk?
A chance event happening.
Match the reason a risk is accepted-so unlikely it is ignored
A cost overrun is accepted should the risk event occur
What best describes a contingency fund for a project?
A reserve to manage all known and unknown project risks.
What identifies and documents and initial set of risks?
A risk breakdown structure and a risk profile.
Which of the following pertain to "risk" in the context of project management?
A risk may have a positive or negative impact on project objectives and risk is an uncertain event or condition.
Which statement best defines the methodology for sharing the project opportunities?
Allocate some or all ownership to another party best able to capture the opportunity for the benefit of the project.
What is a risk event?
An event that may or may not occur in the future that could have an impact on a project's objectives
Which statement best defines the methodology for exploiting project opportunities?
Eliminate the uncertainty associated with an opportunity to ensure that it definitely happens
What functions are included in risk response control?
Executing the response strategies, watching for new risks, initiating contingency plans, and monitoring "triggering" events.
Risk identification process should be limited to just the core team.
False
Where are time buffers typically applied in a project plan?
Activities with severe risk, activities requiring scarce resources, and activities that merged when they are prone to delays.
The goal of failure mode and effects analysis (FMEA) is to prioritize risk by
Assigning numerical FMEA rankings
What type of contingency is typically required to manage a "schedule risk", such as finishing a project late?
Budget reserves, cash as an example.
Which best describes what is meant by "risk avoidance" in a risk management plan?
Changing the project plan to eliminate a risk condition.
Where in the project lifecycle should a project manager begin with the risk identification process?
The planning phase
What is required in order for risk response control to succeed?
Documentation of responsibility
In scenario analysis, the significance of _______ is assessed.
Each risk event
What are the key elements of a contingency plan?
Defining the event that will initiate/trigger the plan into action, cost estimates in the planning, not execution, phase, and all parties affected should have the authority to make commitments
A _______ Is a list of questions that address traditional areas of uncertainty on a project, drawn from previous, similar events.
Risk profile
What term is used to describe the documents needed to develop an adequate risk response control plan?
Risk register
The sequence of steps in managing opportunities is the same as negative risk, but which step utilizes a different approach?
Risk response development
Risk response approaches are
Specific to each risk event
Match the reason a risk is accepted-costs are too small to mitigate
The budget reserve absorbs the risk if they materialize
What is the outcome of the statistical methodology used in the program evaluation and review technique (PERT)?
The likelihood of various project durations
Events that are within the project manager's control are called "risks" but to differentiate events that are outside of a project teams control, the term _______ is often used.
Threat
PERT uses _______ for each activity.
Three time estimates
Why should groups be used in the risk identification stage, rather than individuals?
To make more accurate judgments about risks
A _______ reserve is set up to cover identified risks.
budget
What are the potential actions of project funding cuts such as the reduction of elimination of the source project cash flow?
cancel the remainder of the project and/or reduce the project scope
What are key components of a contingency plan?
cost estimates in the planning, not execution phase, defining the event that will initiate/trigger the plan into action, and all parties affected should have the authority to make commitments.
in a generic project life cycle, which phase would incur the highest cost if a negative risk event occurs?
delivering
What is the benefit of a risk management plan for a project?
minimizing the impact of risks occurring