Deck 7: Managing Risk

Question 1

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

Answer 1

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

Question 2

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.

Answer 2

C
Explanation: In addition to evaluating the severity and probability of risk events the team also assesses when the event might occur and its detection difficulty.

Question 3

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

Answer 3

D
Explanation: The four steps in the risk management process are risk identification,risk assessment,risk response development and risk response control.

Question 4

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 5

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.

Question 6

_______________ 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 7

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 8

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 9

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 10

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 11

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 12

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 13

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 14

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 15

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 16

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 17

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 18

_____________ 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 19

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 20

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 21

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

Question 22

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

Question 23

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 24

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

Question 25

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 26

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

Question 27

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

Question 28

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 29

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 30

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 31

A fixed price contract is an example of

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

Question 32

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 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

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 35

The first step in the risk management process is ________.

Question 36

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 37

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 38

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 39

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 40

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 41

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

Question 42

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

Question 43

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 44

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

Question 45

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

Question 46

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

Question 47

________ 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 48

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

Question 49

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

Question 50

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

Question 51

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

Question 52

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

Question 53

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 54

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 55

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

Question 56

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

Question 57

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

Question 58

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

Question 59

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 60

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

Question 61

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

Question 62

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

Question 63

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

Question 64

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

Question 65

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

Question 66

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

Question 67

What is the difference between mitigating a risk and a contingency plan? Provide real life examples that illustrate the difference.

Question 68

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

Question 69

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

Question 70

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

Question 71

Identify and briefly describe the four steps in the risk management process.

Question 72

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 73

What is the purpose of using tools such as a risk assessment form and a risk severity matrix?

Question 74

Budget 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 75

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

Question 76

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

Question 77

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 78

Why might an organization be opposed to developing and implementing a thorough risk management process?

Question 79

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

Question 80

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