Question 1

How is a Monte Carlo simulation conducted?

Accepted Answer

A Monte Carlo simulation is a mathematical technique that allows you to account for risk in quantitative analysis and decision making. It is a model used to predict the probability of different outcomes when the intervention of random variables is present. Monte Carlo simulations are used in a wide range of fields such as finance, engineering, supply chain, and science to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables.

Here is a step-by-step guide on how a Monte Carlo simulation is typically conducted:

1. **Define the Problem**: Determine the model or process you want to simulate. This includes identifying the variables that will be considered random and those that will be held constant.

2. **Develop a Model**: Create a mathematical model of the process or system you're analyzing. This model should include the relationships between all relevant variables.

3. **Identify Probability Distributions**: For each random variable, determine the appropriate probability distribution. Common distributions include normal, log-normal, uniform, binomial, and Poisson distributions. The choice of distribution should be based on historical data or expert judgment.

4. **Generate Random Inputs**: Use a computer to generate a series of random values from the probability distributions for the random variables. These values simulate the randomness inherent in the real-world process.

5. **Run Simulation Trials**: Input the random values into the mathematical model to calculate the outcome for each trial. This process is repeated many times (often thousands or millions of iterations) to simulate a wide range of possible scenarios.

6. **Collect Results**: After running the trials, you will have a large dataset of simulated outcomes. These results can be analyzed to understand the range of possible outcomes, the likelihood of different outcomes, and other statistical properties.

7. **Analyze the Data**: Use statistical methods to analyze the results of the simulation. This might include calculating the mean, median, variance, and creating histograms or probability density functions to visualize the likelihood of different outcomes.

8. **Interpret the Results**: Based on the analysis, interpret what the simulation results mean for the real-world process or decision at hand. Consider the implications of the range of possible outcomes, particularly focusing on extreme outcomes that could represent significant risk.

9. **Validate the Model**: If possible, compare the results of the Monte Carlo simulation with real-world data to validate the model. Adjust the model as necessary to improve its accuracy.

10. **Report Findings**: Document the simulation process, assumptions, results, and conclusions. This report should provide stakeholders with the information they need to make informed decisions.

Monte Carlo simulations are powerful because they allow analysts to include the variability and uncertainty inherent in many systems and to see how these could impact the system's outcomes. By using random sampling and statistical modeling, Monte Carlo simulations can provide a comprehensive view of the possible outcomes of decisions, investments, or any other type of risk analysis.

Question 2

Gaining consensus from a group of experts would be most closely associated with:

Accepted Answer

A)  Learning Cycles 
B)  Brainstorming 
C)  Nominal Group Technique 
D)  Delphi Technique 
E)  Cause-and-Effect Diagrams 
A)  Learning Cycles 
B)  Brainstorming 
C)  Nominal Group Technique 
D)  Delphi Technique 
E)  Cause-and-Effect Diagrams D

Question 3

Which of the following distributions has mean which is equal to (a + 4b +c) / 6 where a, b, and c are denote optimistic, most likely, and pessimistic estimates respectively?:

Accepted Answer

A)  Discrete Distribution 
B)  Normal Distribution 
C)  Pert Distribution 
D)  Triangular Distribution 
E)  Binomial Distribution 
A)  Discrete Distribution 
B)  Normal Distribution 
C)  Pert Distribution 
D)  Triangular Distribution 
E)  Binomial Distribution C

Question 4

Successful risk management requires _____

Accepted Answer

A)  misunderstanding the benefits of risk management 
B)  inadequate time for risk identification 
C)  use of a non-standard approach to assess risk 
D)  stakeholder responsibility 
E)  occasional monitoring of risks to ensure compliance 
A)  misunderstanding the benefits of risk management 
B)  inadequate time for risk identification 
C)  use of a non-standard approach to assess risk 
D)  stakeholder responsibility 
E)  occasional monitoring of risks to ensure compliance

Question 5

In general, because of the similarities in IT projects, one can manage all projects and risks in the same manner.

Accepted Answer

A) True 
 B)False

Question 6

What is risk monitoring and control?

Accepted Answer

Once the risk response plan is created,

Question 7

The area under the normal distribution curve that lies within 2 standard deviations of the mean (plus or minus) includes about 68% of all the values.

Accepted Answer

A) True 
 B)False

Question 8

_____involves determining the likelihood and project impact of a risk.

Accepted Answer

A)  risk identification 
B)  risk assessment 
C)  risk planning 
D)  risk monitoring and control 
E)  risk evaluation 
A)  risk identification 
B)  risk assessment 
C)  risk planning 
D)  risk monitoring and control 
E)  risk evaluation

Question 9

What is a fishbone (Ishikawa) diagram? How can this tool be used to identify IT project risks?

Accepted Answer

The fishbone, or Ishikawa, diagram devel

Question 10

A _____ identifies threats and opportunities in the external environment as well as organizational strengths and weaknesses .

Accepted Answer

A)  Learning Cycle 
B)  SWOT Analysis 
C)  Nominal Group Technique 
D)  Delphi Technique 
E)  Checklist 
A)  Learning Cycle 
B)  SWOT Analysis 
C)  Nominal Group Technique 
D)  Delphi Technique 
E)  Checklist

Question 11

_____requires determining the true problem, or cause, of the risk.

Accepted Answer

A)  risk identification 
B)  risk assessment 
C)  risk planning 
D)  risk monitoring and control 
E)  risk evaluation 
A)  risk identification 
B)  risk assessment 
C)  risk planning 
D)  risk monitoring and control 
E)  risk evaluation

Question 12

The fishbone or Ishikawa diagram is a form of cause and effect analysis diagramming.

Accepted Answer

A) True 
 B)False

Question 13

The best time to plan for risk is during the project execution phase when risk can be assessed most accurately.

Accepted Answer

A) True 
 B)False

Question 14

Sensitivity analysis is used to determine the joint effects of multiple risky tasks, while Monte Carlo Simulation is used to measure which individual tasks pose the greatest project risk.

Accepted Answer

A) True 
 B)False

Question 15

Failure to follow a formal risk management plan will often cause organizations to be reactive and find themselves in a state of perpetual crisis, a condition known as crisis management.

Accepted Answer

A) True 
 B)False

Question 16

In a normal distribution we would expect to find _______ of all values with in + or - 2 standard deviation.

Accepted Answer

A)  13% 
B)  34% 
C)  68% 
D)  95% 
E)  99% 
A)  13% 
B)  34% 
C)  68% 
D)  95% 
E)  99%

Question 17

_____ are the processes of conducting risk management planning, identification, analysis, response planning, and monitoring and control on a project.

Accepted Answer

A)  Project risk management 
B)  Project risk response 
C)  Project risk planning 
D)  Project risk analysis 
E)  Project risk control 
A)  Project risk management 
B)  Project risk response 
C)  Project risk planning 
D)  Project risk analysis 
E)  Project risk control

Question 18

What are the potential advantages that qualitative approaches have over quantitative ones when it comes to risk analysis and assessment?

Accepted Answer

Qualitative approaches to risk analysis

Question 19

Which of the following distributions has mean which is equal to (a +b +c) / 3 where a, b, and c are denote optimistic, most likely, and pessimistic estimates respectively?:

Accepted Answer

A)  Discrete Distribution 
B)  Normal Distribution 
C)  Pert Distribution 
D)  Triangular Distribution 
E)  Binomial Distribution 
A)  Discrete Distribution 
B)  Normal Distribution 
C)  Pert Distribution 
D)  Triangular Distribution 
E)  Binomial Distribution

Question 20

Initial generation of ideas without evaluation would be most closely associated with:

Accepted Answer

A)  Learning Cycles 
B)  Brainstorming 
C)  Nominal Group Technique 
D)  Delphi Technique 
E)  Cause-and-Effect Diagrams 
A)  Learning Cycles 
B)  Brainstorming 
C)  Nominal Group Technique 
D)  Delphi Technique 
E)  Cause-and-Effect Diagrams

How is a Monte Carlo simulation conducted?

Gaining consensus from a group of experts would be most closely associated with:

Which of the following distributions has mean which is equal to (a + 4b +c) / 6 where a, b, and c are denote optimistic, most likely, and pessimistic estimates respectively?:

Successful risk management requires _____

In general, because of the similarities in IT projects, one can manage all projects and risks in the same manner.

What is risk monitoring and control?

The area under the normal distribution curve that lies within 2 standard deviations of the mean (plus or minus) includes about 68% of all the values.

_____involves determining the likelihood and project impact of a risk.

What is a fishbone (Ishikawa) diagram? How can this tool be used to identify IT project risks?

A _____ identifies threats and opportunities in the external environment as well as organizational strengths and weaknesses .

_____requires determining the true problem, or cause, of the risk.

The fishbone or Ishikawa diagram is a form of cause and effect analysis diagramming.

The best time to plan for risk is during the project execution phase when risk can be assessed most accurately.

Sensitivity analysis is used to determine the joint effects of multiple risky tasks, while Monte Carlo Simulation is used to measure which individual tasks pose the greatest project risk.

Failure to follow a formal risk management plan will often cause organizations to be reactive and find themselves in a state of perpetual crisis, a condition known as crisis management.

In a normal distribution we would expect to find _______ of all values with in + or - 2 standard deviation.

_____ are the processes of conducting risk management planning, identification, analysis, response planning, and monitoring and control on a project.

What are the potential advantages that qualitative approaches have over quantitative ones when it comes to risk analysis and assessment?

Which of the following distributions has mean which is equal to (a +b +c) / 3 where a, b, and c are denote optimistic, most likely, and pessimistic estimates respectively?:

Initial generation of ideas without evaluation would be most closely associated with:

The Nature of Information Technology Projects

Project Methodologies and Processes

Measurable Organizational Value and the Business Case

Project Planning: the Project Infrastructure

Project Planning: Scope and the Work Breakdown Structure

The Work Breakdown Structure and Project Estimation

Managing Project Stakeholders and Communication

Managing Project Quality

Leading the Project Team

Managing Organizational Change, Resistance, and Conflict

Project Completion

Filters

Exam 7: Managing Project Risk

How is a Monte Carlo simulation conducted?

Gaining consensus from a group of experts would be most closely associated with:

Which of the following distributions has mean which is equal to (a + 4b +c) / 6 where a, b, and c are denote optimistic, most likely, and pessimistic estimates respectively?:

Successful risk management requires _____

In general, because of the similarities in IT projects, one can manage all projects and risks in the same manner.

What is risk monitoring and control?

The area under the normal distribution curve that lies within 2 standard deviations of the mean (plus or minus) includes about 68% of all the values.

_____involves determining the likelihood and project impact of a risk.

What is a fishbone (Ishikawa) diagram? How can this tool be used to identify IT project risks?

A _____ identifies threats and opportunities in the external environment as well as organizational strengths and weaknesses .

_____requires determining the true problem, or cause, of the risk.

The fishbone or Ishikawa diagram is a form of cause and effect analysis diagramming.

The best time to plan for risk is during the project execution phase when risk can be assessed most accurately.

Sensitivity analysis is used to determine the joint effects of multiple risky tasks, while Monte Carlo Simulation is used to measure which individual tasks pose the greatest project risk.

Failure to follow a formal risk management plan will often cause organizations to be reactive and find themselves in a state of perpetual crisis, a condition known as crisis management.

In a normal distribution we would expect to find _______ of all values with in + or - 2 standard deviation.

_____ are the processes of conducting risk management planning, identification, analysis, response planning, and monitoring and control on a project.

What are the potential advantages that qualitative approaches have over quantitative ones when it comes to risk analysis and assessment?

Which of the following distributions has mean which is equal to (a +b +c) / 3 where a, b, and c are denote optimistic, most likely, and pessimistic estimates respectively?:

Initial generation of ideas without evaluation would be most closely associated with:

The Nature of Information Technology Projects

Project Methodologies and Processes

Measurable Organizational Value and the Business Case

Project Planning: the Project Infrastructure

Project Planning: Scope and the Work Breakdown Structure

The Work Breakdown Structure and Project Estimation

Managing Project Stakeholders and Communication

Managing Project Quality

Leading the Project Team

Managing Organizational Change, Resistance, and Conflict

Project Completion

Filters