Deck 7: Managing Risk

Question 1

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.

Answer 1

E
Explanation: Risk management team members assess the significance of each risk event in terms of the probability or likelihood that the risk will occur and the impact of the event.

Question 2

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.

Answer 2

A
Explanation: A risk profile is a list of questions that address traditional areas of uncertainty on a project.These questions have been developed and refined from previous, similar projects.

Question 3

An uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives is termed a

A)Random chance.
B)Disaster.
C)Risk.
D)Hazard.
E)Bad luck.

Answer 3

C
Explanation: In the context of projects, risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives.

Question 4

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 5

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 6

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 7

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 budget funds for managing the risks.
E)Appoint a risk manager.

Question 8

The cost impact of a risk event occurring as a project proceeds through its life cycle tends 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 9

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)Ignoring
D)Transferring
E)Avoiding

Question 10

_______________ 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 11

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 12

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 13

_____________ 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 14

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

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

Question 15

Based on the following, which event should you be most concerned about? Risk Event
Likelihood
Impact
Bad weather
2
3
Design flaw
3
5
Accident
1
5
Shipment delay
2
2
Power outage
1
5

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

Question 16

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 17

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 18

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 19

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 20

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 21

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 22

A fixed price contract is an example of

A)Avoiding risk.
B)Transferring risk.
C)Accepting risk.
D)Ignoring risk.
E)Mitigating risk.

Question 23

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 24

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

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

Question 25

This response is used to remove any uncertainly associated with an identified Opportunity.

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

Question 26

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.

Question 27

Which of the following is NOT involved in risk control?

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 28

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 29

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

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

Question 30

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 31

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 32

A Risk Response Matrix contains all of the following EXCEPT

A)Contingency plan.
B)Trigger.
C)Who is responsible.
D)Response.
E)When the risk will occur.

Question 33

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

Question 34

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

A)Management Reserve.
B)Success Factor.
C)Unscheduled Activity.
D)Positive Risk.

Question 35

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)Ignoring
D)Transferring
E)Avoiding

Question 36

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 37

Which of the following is identified to cover major unforeseen risks and, hence, are applied to the total project?

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

Question 38

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

Question 39

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)Budget
C)Contingency
D)Padded
E)Just in case

Question 40

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)All of these choices are correct.

Question 41

Most changes on a project are related to

A)Scope Changes.
B)Improvement Changes.
C)Implementing Contingency Plans.
D)All of these choices are correct.

Question 42

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

Question 43

The significance of a risk is assessed in terms of the ________ and the impact of the event.

Question 44

________ reserves are identified for specific work packages and are distributed by the project manager and the team members.

Question 45

Flooding would be devastating to the project; however, it is very unlikely.The project manager is most likely to __________ this risk.

Question 46

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

Question 47

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

Question 48

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

Question 49

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

Question 50

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

Question 51

The first step in the risk management process is ________.

Question 52

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

Question 53

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.

Question 54

The measurement of how easy it would be to detect that the event was going to occur in time to take mitigating action is known as __________.

Question 55

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.

Question 56

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

Question 57

The event or point in time when a contingency plan will be implemented is called a _________.

Question 58

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

Question 59

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

Question 60

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

Question 61

A ____________ is an alternative that will be used if a possible foreseen risk event becomes a reality.

Question 62

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

Question 63

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

Question 64

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

Question 65

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

Question 66

________ reserves are controlled by the project manager and the owner of the project and are used to cover major unforeseen risks to the entire project.

Question 67

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

Question 68

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

Question 69

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

Question 70

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

Question 71

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 72

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

Question 73

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

Question 74

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 75

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

Question 76

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 77

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

Question 78

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

Question 79

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

Question 80

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.