Deck 7: Managing Risk

Question 1

The project being delayed is an example of a major risk that should be assessed.

Answer 1

False

Question 2

While a "can do" attitude is essential during implementation, project managers have to encourage critical thinking when it comes to risk identification.

Answer 2

True

Question 3

Responses to all identifiable risks should be a top priority for the project manager.

Answer 3

False

Question 4

When developing a response to a risk by scheduling outdoor work in the summer, investing in up-front safety training, or choosing high-quality materials, these are examples of retaining a risk.

Question 5

Adopting proven technology instead of experimental technology is an example of mitigating a risk.

Question 6

Risk events that occur in the early stages of a project will have a greater cost impact than those that occur in later stages.

Question 7

When considering risk value, the lower the value, the higher the level of risk.

Question 8

A risk is an uncertain event that, if it occurs, can have a positive or negative effect on project objectives.

Question 9

Contingency reserves are set up to cover identified risks associated with specific segments of a project while management reserves are set up to cover unidentified risks associated with the total project.

Question 10

The probability that a risk event will occur is higher during the initial stages of a project.

Question 11

The risk identification process should be limited to just the core project team.

Question 12

Risk management is a reactive approach that is designed to ensure that surprises are reduced and that negative consequences associated with undesirable events are minimized.

Question 13

Enhancing a risk is a tactic that seeks to eliminate the uncertainty associated with an opportunity to ensure that it definitely happens.

Question 14

The first step in the risk management process is risk assessment.

Question 15

Change management systems involve reporting, controlling, and recording changes to the project baseline.

Question 16

A risk profile is a list of questions that have been developed and refined from previous, similar projects.

Question 17

Fixed-price contracts are an example of transferring risk from an owner to a contractor.

Question 18

One common mistake that is made early on in the risk identification process is to focus on consequences and not on the events that could produce consequences.

Question 19

If, during risk response development, you successfully identify how you will respond to a risk, contingency planning is unnecessary.

Question 20

Performance bonds, warranties, and guarantees are financial instruments used to share risk.

Question 21

One common mistake made early in the risk identification process is to

A) not consider all possibilities.
B) encourage participants be over optimistic.
C) support participants being over pessimistic.
D) focus on consequences and not on the events that could produce consequences.
E) give too much attention to past events.

Question 22

_______________ focuses on how to respond to events that have a positive impact on a project.

A) Risk management
B) Opportunity management
C) Value management
D) Contingency management
E) Prospect management

Question 23

Contingency funding is made up of contingency reserves and management reserves.

Question 24

Based on the following, which event should you be most concerned about?

A) Bad weather
B) Design flaw
C) Accident
D) Shipment delay
E) Power outage

Question 25

Organizations use __________ in conjunction with work breakdown structures to help management teams identify and eventually analyze risk.

A) risk breakdown structures
B) contingency breakdown structures
C) scenario analysis
D) organizational breakdown structure
E) risk assessment

Question 26

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) severity matrix.

Question 27

Which of the following groups should NOT be a part of the risk identification process?

A) Project team
B) Customers
C) Subcontractors
D) Vendors
E) All of these groups can be included in the risk identification process

Question 28

The cost impact of a risk event occurring as a project proceeds through its life cycle tends to

A) rise sharply.
B) drop sharply and then level out.
C) rise sharply and then level out.
D) remain about the same.
E) slowly drop.

Question 29

Tools such as a risk assessment form and a risk severity matrix are used to

A) identify risks.
B) control risks.
C) assess risks.
D) regulate risks.
E) respond to risks.

Question 30

_____________ 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) Detection difficulty
B) Impact scaling
C) Probability analysis
D) Awareness level
E) Warning assessment

Question 31

Although most risks are presented as something not desirable, there can also be desirable risks called Opportunities.

Question 32

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

Question 33

Having an environment where identified risks are treated professionally will lead to better control of risks.

Question 34

Opportunities identified within a project are treated very different from risks.

Question 35

A list of questions that address traditional areas of uncertainty on a project is termed a

A) risk profile.
B) questionnaire.
C) research matrix.
D) query.
E) checklist.

Question 36

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.

Question 37

Purchasing an accident insurance policy would be an example of responding to a risk by _____________ it.

A) mitigating
B) retaining
C) escalating
D) transferring
E) avoiding

Question 38

The chances of a risk event occurring as a project proceeds through its life cycle tend 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.

Question 39

After your team has successfully identified potential risks that could affect the project, what is the next step?

A) Create a risk breakdown structure
B) Assess identified risks
C) Create contingency plans
D) Decide how to respond to all risks
E) Mitigate risks

Question 40

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 funds for managing the risks.
E) appoint a risk manager.

Question 41

Risks that can result in a system or process that will not work are known as

A) technical risks.
B) funding risks.
C) schedule risks.
D) cost risks.
E) unnecessary risks.

Question 42

The risk associated with the unlikelihood that one of the key members will be struck by lightning would most likely be handled by which of the following?

A) Mitigating
B) Retaining
C) Escalating
D) Transferring
E) Avoiding

Question 43

This response is used to increase the potential effect of an identified opportunity.

A) Exploit
B) Share
C) Enhance
D) Accept
E) Escalate

Question 44

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.

Question 45

Adopting proven technology instead of experimental technology in order to eliminate technical failure would be an example of which risk response?

A) Mitigating
B) Retaining
C) Escalating
D) Transferring
E) Avoiding

Question 46

Which of the following activities might you consider adding a time buffer to?

A) Activities with severe risks
B) Merge activities that are prone to delays
C) Activities with scarce resources
D) Noncritical activities with very little slack
E) You might consider adding a time buffer to any of these activities.

Question 47

A Risk Response Matrix contains all of the following EXCEPT

A) a contingency plan.
B) a trigger.
C) who is responsible.
D) a response.
E) when the risk will occur.

Question 48

One of the following five choices is NOT involved in risk control. Which choice is it?

A) Executing the risk response strategy
B) Initiating contingency plans
C) Establishing a change control system
D) Establishing contingency funds
E) Watching for new risks

Question 49

Change management systems are designed to accomplish all of the following EXCEPT

A) track all changes that are to be implemented.
B) review, evaluate, 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 these are examples of what change management systems are designed to accomplish.

Question 50

Risks are evaluated in terms of

A) likelihood and cost.
B) cost and schedule.
C) impact and cost.
D) time and impact.
E) likelihood and impact.

Question 51

One of the choices below refers to major unforeseen risks and endeavors to supply funds for the same. Which choice is it?

A) Project reserves
B) Management reserves
C) Time buffers
D) Activity reserves
E) Contingency reserves

Question 52

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) unidentified risk
C) contingency
D) padded
E) just in case

Question 53

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 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.
C) 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 response is created by the project team and the project manager while the project manager and the customer agree on the contingency plan.
E) 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.

Question 54

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

Question 55

This response is used to remove any uncertainty associated with an identified opportunity.

A) Exploit
B) Share
C) Enhance
D) Accept
E) Escalate

Question 56

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) Avoiding

Question 57

This response is used when an identified opportunity is not actively pursued.

A) Exploit
B) Share
C) Enhance
D) Accept
E) Escalate

Question 58

A fixed price contract is an example of

A) avoiding risk.
B) transferring risk.
C) accepting risk.
D) escalating risk.
E) mitigating risk.

Question 59

An unanticipated event that occurs which is beneficial to a project is known as a(n)

A) Management Reserve
B) Success Factor
C) Opportunity
D) Risk
E) Desirable event

Question 60

This response allocates some or all of the responsibility of realizing the identified opportunity for the project.

A) Exploit
B) Share
C) Enhance
D) Accept
E) Escalate

Question 61

A ____________ (responsible for the work package) involved in risk assessment and mitigation will help focus attention on all aspects of risk management.

A) project manager
B) line person
C) stakeholder
D) team leader
E) project sponsor

Question 62

Testing a new project on a smaller isolated area prior to installing it for the entire organization is an example of ________ a risk.

A) transferring
B) escalating
C) avoiding
D) retaining
E) mitigating

Question 63

An uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives is known as a __________.

A) milestone
B) risk
C) happening
D) instant in time
E) event whose probability of occurrence is unknown

Question 64

The likelihood of a risk occurring _____ as a project goes through its life cycle.

A) increases
B) decreases
C) moderates
D) amplifies
E) becomes more probable

Question 65

The measurement of how easy it would be to detect that the event was going to occur in time to take mitigating action (i.e., how much warning time we would have) is known as __________.

A) risk measurement
B) mitigation
C) risk assessment
D) detection difficulty
E) detection measurement

Question 66

The significance of a risk is assessed in terms of the _____ and the ______ of the risk.

A) notoriety, visibility
B) frequency, visibility
C) impact, visibility
D) likelihood, impact
E) visibility, impact

Question 67

Which of the following is the first step to risk management?

A) Risk identification
B) Risk assessment
C) Risk response development
D) Risk response control
E) Risk qualitative / quantitative analysis

Question 68

When considering risk response development, passing risk to another party instead of changing it is known as ____________ the risk.

A) transferring
B) escalating
C) avoiding
D) retaining
E) diminishing

Question 69

The implications of an identified change need to be assessed by

A) the primary project stakeholder.
B) the chief fiscal officer.
C) a person with expertise related to the change.
D) the authorizing project manager.
E) the program manager.

Question 70

The ________ form identifies each risk event, the likelihood of it occurring, the potential impact, when it may occur, and the degree of difficulty in detecting it.

A) risk measurement
B) mitigation
C) detection difficulty
D) risk assessment
E) risk alleviation

Question 71

Choosing to move a concert indoors to eliminate the threat of bad weather is an example of ____________ a risk.

A) transferring
B) escalating
C) avoiding
D) mitigating
E) retaining

Question 72

When considering risk response development, assuming the risk because the chance of such an event is slim is known as _________ the risk.

A) transferring
B) mitigating
C) avoiding
D) retaining
E) escalating

Question 73

A list of questions that address traditional areas of uncertainty on a project is known as a

A) risk template
B) risk profile
C) risk questionnaire
D) risk appraisal
E) risk assessment

Question 74

When considering risk response development, changing the plan to eliminate the risk or condition is known as ____________ the risk.

A) transferring
B) escalating
C) avoiding
D) retaining
E) diminishing

Question 75

Most changes on a project are related to

A) scope changes.
B) improvement changes.
C) implementing contingency plans.
D) customer-driven changes to requirements.
E) All of these alternatives are correct.

Question 76

When considering risk response development, reducing the likelihood that an event will occur and / or reducing the impact that an adverse event would have on a project is known as _________ the risk.

A) escalating
B) mitigating
C) avoiding
D) transferring
E) eliminating

Question 77

The ________ matrix is divided into red, yellow, and green zones representing major, moderate, and minor risks.

A) risk measurement
B) mitigation
C) detection difficulty
D) risk assessment
E) risk severity

Question 78

Performance bonds, warranties, and insurance are examples of ________ a risk.

A) transferring
B) escalating
C) avoiding
D) retaining
E) mitigating

Question 79

Including the change control system within the ________ is a key to a successful project.

A) work breakdown structure
B) project baseline
C) risk management plan
D) work breakdown structure and project baseline
E) project baseline and risk management plan

Question 80

According to the Failure Mode and Effects Analysis (FMEA), Impact × Probability × Detection = __________.

A) risk severity
B) risk assessment
C) risk value
D) risk mitigation
E) risk difficulty