Deck 7: Managing Risk

Question 1

In the beginning the focus of risk management should be on risks that

A)Impact the whole project
B)Impact the critical path
C)Are known
D)Have the greatest cost impact
E)Have the greatest schedule impact

Answer 1

A
Explanation: The focus at the beginning should be on risks that can affect the whole project as opposed to a specific section of the project or network.

Question 2

The chances 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

Answer 2

E

Question 3

The two scales of a risk severity matrix measure

A)Time, cost
B)Cost, schedule
C)Impact, cost
D)Time, impact
E)Likelihood, impact

Answer 3

E
Explanation: The risk matrix presented in Figure 7.7 on page 218 consists of a 5 x 5 array of elements with each element representing a different set of impact and likelihood values.

Question 4

Which of the following is not one of the probability analysis tools?

A)Ratio/range analysis
B)Decision tree
C)PERT simulation
D)PERT
E)All of these are probability analysis tools

Question 5

Which of the following is typically included in risk profiles?

A)Management aspects
B)Market aspects
C)Technical aspects
D)Both A and C are included
E)A, B, and C are all included

Question 6

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)Risk severity matrix

Question 7

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 8

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

A)Not all possibilities are considered
B)Participants are over-optimistic
C)Participants are over-pessimistic
D)Focus on objectives and not on the events that could produce consequences.
E)Too much attention is given to past events

Question 9

The easiest and most commonly used technique for analyzing risks is _____ analysis.

A)Probability
B)Scenario
C)Payback
D)Risk/reward
E)Impact

Question 10

The 1999 NASA Mars Climate Orbiter is an example of

A)Disaster avoidance through proactive risk management
B)Murphy's Law
C)Proper use of critical thinking
D)Mismanaged risk control
E)Using historical records to assess risk

Question 11

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 12

Which of the following would not be considered a threat?

A)Inflation
B)Meeting the project schedule
C)International disruptions
D)Economic conditions
E)Competition

Question 13

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 14

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

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

Question 15

All of the following are included in the risk identification process except

A)Customers
B)Subcontractors
C)Competitors
D)Vendors
E)None of these are included

Question 16

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 17

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 18

A risk profile is a list of questions that address traditional areas of uncertainty on a project that answers developed from:

A)When the event might occur in the project
B)Chances of the event occurring
C)Interaction with other parts of the project or with other projects
D)From previous, similar projects
E)Magnitude or severity of the event's impact

Question 19

One of the keys to success in risk identification is

A)Critical thinking
B)Optimism
C)Pessimism
D)A "can do" attitude
E)All of these are correct

Question 20

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

A)Risk profile
B)Questionnaire
C)Research
D)Query
E)Checklist

Question 21

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 22

The demolition of the Seattle Kingdome (Snapshot from Practice) is an example of which of the following?

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

Question 23

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

A)Budget reserves
B)Management reserves
C)Time buffers
D)Both B and C are correct
E)A, B, and C are all correct

Question 24

Risk events such as inflation, market acceptance, and government regulations are referred to as ________.

Question 25

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

Question 26

The easiest and most commonly used technique for analyzing risks is ________.

Question 27

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)Sharing

Question 28

The risk associated with one of the key members being stuck by lightning would most likely be handled by which of the following?

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

Question 29

Which of the following is used to review activity and project risk?

A)NPV
B)S-curves
C)PERT
D)Decision trees
E)All of these can be used

Question 30

Technical risks are:

A)Can often be the kind that cause the project to be shut down.
B)Problematic
C)Imposed duration dates
D)Both A and B are correct
E)A, B, and C are all correct

Question 31

The first step in the Risk Management process is ________.

Question 32

A Risk Response Matrix contains all of the following except

A)Contingency plan
B)Trigger
C)Who is responsible?
D)Response
E)All of these are included in the matrix

Question 33

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 34

The ________ impact of a risk event in a project is less if the event occurs earlier rather than later.

Question 35

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

Question 36

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 37

This risk assessment tool is a variation of the risk severity matrix that includes the ease of detection for each of the identified risks.

A)PERT simulation
B)FMEA analysis
C)Ratio/range analysis
D)Probability analysis
E)Semi-quantitative analysis

Question 38

Change management systems are designed to accomplish all of the following except:

A)Track all changes that are to be implemented
B)Review, evaluates, 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 the above are correct

Question 39

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

Question 40

Detailing all identified risks, including descriptions, category, and probability of occurring, impact, responses, contingency plans, owners and current status is called:

A)Management reserves
B)Change control
C)Contingency reserves
D)Risk register
E)Risk profiles

Question 41

The horizontal scale on the Risk Severity Matrix measures the _________ of a potential risk event.

Question 42

In __________ the Risk Severity Matrix is extended by including the ease of detecting a risk event occurring.

Question 43

________ reserves are identified for specific work packages and cover risks that have a low probability of occurring.

Question 44

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

Question 45

The first step in the risk management process is Risk Assessment.

Question 46

The vertical scale on the Risk Severity Matrix measures the _________ of a potential risk event.

Question 47

During risk identification the smaller risks should be identified first because they will naturally lead to identifying the larger risks.

Question 48

Due to the impact over a long period of time, 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 49

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

Question 50

When the entertainment industry formed a consortium to define a common operating format for DVD it was ________ the risk.

Question 51

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

Question 52

A ____________ is useful for summarizing how the project team plans to manage risks that have been identified.

Question 53

The "Snapshot from Practice" case where Ellipsus Systems developed parallel prototype systems (WAP and JAVA) is an example of _________ a risk.

Question 54

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

Question 55

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 56

In a ________, three different estimates of activity times are used to statistically predict the time an activity will take to complete.

Question 57

If a risk event is very unlikely to occur the project owner would probably ________ the risk.

Question 58

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

Question 59

Risks such as inflation and monetary exchange rates are not usually included in a project's risk assessment.

Question 60

A ________ identifies what to do if a potential risk event actually occurs.

Question 61

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

Question 62

Since the goal is to find problems before they happen, the project manager should encourage critical thinking when it comes to risk identification.

Question 63

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

Question 64

Project managers need to establish an environment in which participants feel comfortable raising concerns and admitting mistakes.

Question 65

Identify at least six items that may be included on a Risk Profile.

Question 66

Identify and briefly describe the four steps in risk management.

Question 67

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

Question 68

What is a risk profile and what benefits does it provide to risk management?

Question 69

In a Risk Severity Matrix a green zone risk is considered inconsequential and ignored unless their status changes.

Question 70

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

Question 71

The Risk Severity Matrix rates risk events based upon schedule and cost.

Question 72

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

Question 73

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

Question 74

Describe the process for identifying project risks.

Question 75

Describe the relationship between the likelihood of a risk event occurring and the cost of fixing the risk event as a project proceeds through its life cycle.

Question 76

The quality and credibility of the risk analysis process requires that different levels of risk probabilities and impacts be defined.

Question 77

The FMEA method calculates a risk value by assigning ease of detection ratings to the key risk elements.

Question 78

Budget reserves are setup 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 79

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

Question 80

Scheduling outdoor work in the summer, investing in up front safety training, and choosing high quality materials are examples of retaining a risk.