Deck 11: Managing Project Risk

Question 1

After potential risks have been identified, the project team then evaluates the risk based on the probability that the risk event will occur and the potential loss associated with the event.

Answer 1

True

Question 2

According to Tzvi Raz, Aaron Shenhar, and Dov Dvir's risk management studies, risk management is widely used.

Answer 2

False

Question 3

Risk sharing involves partnering with others to share responsibility for the risk activities.

Answer 3

True

Question 4

Project risk is an uncertain event that has an effect on at least one project objective.

Question 5

A project with new and emerging technology will have a low complexity rating and a correspondingly low risk.

Question 6

On projects with a large equipment budget, the highest portion of risk may be toward the end of the project.

Question 7

All project mangers conduct a formal risk assessment on the project.

Question 8

Risk is the possibility of loss or injury.

Question 9

The purchase of insurance on certain items is a risk sharing method.

Question 10

Identifying risk is a purely routine, disciplined process.

Question 11

The project team often develops an alternative method for accomplishing a project goal when a risk event has been identified that may frustrate the accomplishment of that goal.

Question 12

A risk response plan can be used to identify increasing levels of detailed risk analysis.

Question 13

During the closeout phase, agreements for risk transfer should be concluded.

Question 14

Proactive project managers usually rely on their ability to handle unexpected events without prior planning.

Question 15

On projects with a low complexity profile, the project management team typically develops a list of items perceived to be slightly higher risk and track them during project reviews.

Question 16

The risk of not finding the skills needed to execute the project is an example of an environmental risk.

Question 17

Risk management is all about eliminating risk.

Question 18

According to David Parker and Alison Mobey's study of project managers, there was a high understanding of the tools and benefits of a structured analysis of project risks.

Question 19

Risk is allocated evenly over the life of the project.

Question 20

Contingency is typically managed as multiple line items in the project budget.

Question 21

According to David Parker and Alison Mobey's study of project managers:

A) there was a low understanding of the tools and benefits of a structured analysis of project risks.
B) work is oriented toward continuous improvement of existing processes over longer periods of time.
C) most managers focused on the work processes of the operation in order to manage risk.
D) most managers are risk averse and prefer to be optimistic and not consider risks or to avoid taking risks whenever possible.
E) managers are long-term focused and process oriented.

Question 22

An) _____ is the possible occurrence that may have a negative impact on the project.

A) critical path
B) scope creep
C) risk event
D) chance cause
E) control limit

Question 23

Risks that can be anticipated, such as exceptionally bad weather, are called _____.

A) risk events
B) uncertain risks
C) known risks
D) random risks
E) risk aversions

Question 24

External complexity includes legal, cultural, political, and ecological factors.

Question 25

Projects with high scores for internal complexity have low risks because of the detailed planning needed to deal with changes of scope or project statements.

Question 26

Reactive project managers:

A) do not consider risks.
B) prefer to be optimistic.
C) will develop elaborate risk management programs for their projects.
D) are more confident in their ability to handle unexpected events without prior planning.
E) avoid taking risks whenever possible.

Question 27

Which of the following is

A) David Hillson uses the same framework as the resource breakdown structure for developing a risk breakdown structure.
B) A risk breakdown structure organizes risks associated with each activity in the work breakdown structure using a table with increasing levels of detail to the right.
C) Hillson's approach helps the project team identify unknown risks.
D) Hillson's approach can be restrictive and less creative in identifying known risks.
E) Hillson's approach can be restrictive in identifying risks not easily found inside the work breakdown structure.

Question 28

Proactive project managers:

A) do not consider risks.
B) prefer to be optimistic.
C) will develop elaborate risk management programs for their projects.
D) are more confident in their ability to handle unexpected events without prior planning.
E) avoid taking risks whenever possible.

Question 29

Inadequacy of resources is an example of environmental complexity.

Question 30

On highly complex projects, _____.

A) basic measures such as percentage of activities completed and percentage of budget spent are adequate for budget evaluation
B) the process for evaluating risk is more informal with risk assessment meetings conducted every once in a while to assess risks at different phases of the project
C) an outside expert may be included in the risk assessment process and the risk assessment plan may take a more prominent role in the project execution plan
D) the project management team may develop a list of items perceived to be higher risk and track them during project reviews
E) the project manager may informally track items that may be considered risk items

Question 31

_____ simulation is a statistical model used on projects, which simulates a possible range of outcomes by trying many different combinations of risks based on their likelihood.

A) Discrete-event
B) Monte Carlo
C) Deterministic modeling
D) Mixed-mode
E) Parallel

Question 32

Which of the following is

A) Project risk focuses on identifying, assessing, and eliminating the risks on the project.
B) Risk management is all about eliminating risk.
C) Project risk is an uncertain event that, even if it occurs, has no effect on project objectives.
D) There are no risk-free projects.
E) Risk management involves identification, evaluation, and elevation of risk.

Question 33

_____ is about developing an understanding of which potential risks have the greatest possibility of occurring and can have the greatest negative impact on the project.

A) Risk mitigation
B) Risk sharing
C) Risk generalization
D) Risk evaluation
E) Risk management

Question 34

An) _____ organizes the risks that have been identified into categories using a table with increasing levels of detail to the right.

A) master schedule
B) risk breakdown structure
C) control chart
D) risk management plan
E) risk response plan

Question 35

There is _____ correlation between project risk and project complexity.

A) an unknown
B) a positive
C) no
D) a negative
E) a general

Question 36

The _____ is the plan to reduce or eliminate loss from unexpected events.

A) risk transfer plan
B) risk avoidance plan
C) risk acceptance plan
D) risk deflection plan
E) risk mitigation plan

Question 37

The possible loss that is associated with the business purpose of the project is called _____.

A) project risk
B) organizational risk
C) strategic risk
D) external risk
E) financial risk

Question 38

The sudden unavailability of key individuals on the project is an example of _____ risks.

A) people
B) cost
C) schedule
D) client
E) contractual

Question 39

On projects with a low complexity profile, _____.

A) the process for evaluating risk is more formal with risk assessment meetings held during the life of the project to assess risks at different phases of the project
B) an outside expert may be included in the risk assessment process and the risk assessment plan may take a more prominent role in the project execution plan
C) the project management team may develop a list of items perceived to be higher risk and track them during project reviews
D) the project manager may informally track items that may be considered risk items
E) statistical models are sometimes used to evaluate risk because there are too many different possible combinations of risks to calculate them one at a time

Question 40

According to Tzvi Raz, Aaron Shenhar, and Dov Dvir's risk management studies, which of the following is

A) Risk management is widely used.
B) The projects that were most likely to have a risk management plan were those that were actually high risk.
C) When risk management practices were applied to projects, they appeared to be moderately related to the success of the project.
D) The risk management approach influenced the meeting of project schedules and cost goals but exerted more influence on project product quality.
E) Good risk management increases the likelihood of a successful project.

Question 41

Describe the Monte Carlo simulation.

Question 42

High scores for external complexity imply high risks to the schedule, budget, and quality due to _____.

A) organizational complexity and changes of scope
B) unknown flaws in the technology and lack of familiarity with it
C) expensive resolution to lawsuits
D) unknown factors and limited resources
E) lack of clarity in project and scope statements

Question 43

What are the elements of risk management during the initiation phase of the project?

Question 44

_____ is a risk reduction method that shifts the risk from the project to another party.

A) Risk mitigation
B) Risk sharing
C) Risk breakdown structure
D) Risk avoidance
E) Risk transfer

Question 45

As the project progresses into the execution phase, _____.

A) risks need to be checked off on activities that have been performed
B) the total risk on the project typically increases
C) risks are identified with each major group of activities
D) a risk response plan can be used to identify increasing levels of detailed risk analysis
E) the risk breakdown structure needs to be examined to be sure all the risk events have been avoided

Question 46

Which of the following is

A) It usually involves developing an alternative strategy that has a higher probability of success.
B) It typically involves lower costs associated with accomplishing a project task.
C) A common risk avoidance technique is to adopt new techniques rather than use existing technologies.
D) A project team chooses a new vendor over an existing one with a proven track record.
E) It involves maintaining the project plan to eliminate a risk.

Question 47

Which of the following is

A) Risk seems to have a negative correlation to complexity.
B) High-risk projects are in very few cases highly complex.
C) The risk breakdown analysis explores the project from the perspective of what elements on the project add to project complexity.
D) The project team develops a risk breakdown structure that addresses the items that are identified as high risk.
E) The process of conducting a risk analysis focuses on developing an understanding of what can go wrong and the likelihood that it will go wrong.

Question 48

What is the advantage of risk sharing a project with another company?

Question 49

What are the elements of risk management in the planning phase of the project?

Question 50

Which of the following is part of the closeout phase?

A) Conceptual estimate of risk
B) Monte Carlo simulation
C) Conclusion of risk sharing and risk transfer agreements
D) Creating a RBS
E) Resource leveling

Question 51

Which of the following is

A) Contingency funds are funds set aside by the client to address unforeseen events that cause the project costs to increase.
B) Projects with a high risk profile will typically have a small contingency budget.
C) Contingency is typically managed as multiple line items in the project budget.
D) Allocating the contingency budget to the items in the budget that have low risk allows the project team to track the use of contingency against the risk plan.
E) The availability of contingency funds in the line item budget may increase the use of contingency funds to solve problems rather than finding alternative solutions.

Question 52

On global projects with a large amount of political risk, the highest portion of risk may be _____.

A) in the execution phase
B) in the planning stage
C) toward the end of the project
D) in the early phases of the project
E) during the procurement of goods and services

Question 53

_____ risks are events that have been identified and analyzed for which advanced planning is possible.

Question 54

What is the difference between project risk and organizational risk?

Question 55

High scores for internal complexity imply high risks to the budget, schedule, and quality due to _____.

A) expensive resolution to public opposition
B) organizational complexity and changes of scope
C) unknown factors and limited resources
D) unknown flaws in the technology and lack of familiarity with it
E) expensive resolution to lawsuits

Question 56

High scores for environmental complexity imply high risks for delay and _____.

A) unknown factors
B) limited resources
C) expensive resolution to lawsuits
D) organizational complexity
E) lack of clarity in project and scope statements

Question 57

During the closeout phase, _____.

A) risks must be weighed against the potential benefit of the project's success
B) agreements for risk sharing and risk transfer need to be concluded
C) risks are identified with each major group of activities
D) a risk breakdown structure can be used to identify increasing levels of detailed risk analysis
E) the risk plan needs to be updated with new information

Question 58

Once the project is approved and moves into the planning stage, _____.

A) agreements for risk sharing need to be concluded
B) the total risk on the project typically reduces as activities are performed without loss
C) risks must be weighed against the potential benefit of the project's success in order to decide if the project should be chosen
D) risks are identified with each major group of activities
E) a risk response plan can be used to identify increasing levels of detailed risk analysis

Question 59

Risk must be considered in the _____ phase and weighed against the potential benefit of the project's success in order to decide if the project should be chosen.

A) completion
B) closeout
C) execution
D) planning
E) initiation

Question 60

Describe the impact of high scores in technology complexity. What are the risks of technology complexity?

Question 61

Projects that have a high score in the external complexity category in the _____ Index are larger and longer than usual for the project management group and the project manager and the available resources are lacking.

Question 62

During the closeout phase, agreements for risk _____ and risk _____ need to be concluded and the risk breakdown structure examined to be sure all the risk events have been avoided or mitigated.

Question 63

_____ includes both the identification of potential risk and the evaluation of the potential impact of the risk.

Question 64

Risk seems to have an) _____ correlation to complexity.

Question 65

Two variables that respond in the same way to changes in their environment are said to have an) _____.