Question 1

Based on the projected selling price of $20 per unit,the manufacturer invested a substantial portion of its available cash in a machine that could produce twenty-thousand gumballs in an hour.If consumers weren't willing to pay this much for gum,then the manufacturer faced significant:
A) Financial risk.
B) Promotion risk.
C) Cost estimate risk.
D) Market risk.

Accepted Answer

The risk faced by the manufacturer in this scenario is market risk, as it depends on the willingness of consumers to pay the projected selling price for the gumballs. If consumers are not willing to pay this much, then the manufacturer may have difficulty selling their product and generating revenue, which could result in financial losses. However, the other options (promotion risk, cost estimate risk) do not accurately capture the key risk factor in this scenario.

Question 2

The probability that project revenues will NOT be sufficient to repay the debts is:
A) Financial risk
B) Cost estimate risk.
C) Market risk.
D) Promotion risk.

Accepted Answer

The probability that project revenues will not be sufficient to repay the debts is a form of financial risk. Financial risk is the risk of financial loss, which can be caused by factors such as market fluctuations, interest rate fluctuations, or a company's inability to meet its financial obligations. In this case, if the project revenues are not enough to repay debts, there is a risk of financial loss.

Question 3

A method for conducting risk factor identification that consolidates the judgments of isolated anonymous respondents is:
A) A brainstorming meeting.
B) The Delphi method.
C) Past history.
D) Multiple assessments.

Accepted Answer

The Delphi method is a well-established method for conducting risk factor identification that involves collecting anonymous responses from a panel of experts in multiple rounds to achieve a convergence of opinions. This method is designed to provide a reliable and unbiased assessment of risk factors by consolidating the judgments of a diverse group of responders.

Question 4

A serious risk factor probably has:
A) A high consequence and a medium likelihood.
B) A high consequence and a low likelihood.
C) A medium consequence and a low likelihood.
D) A low consequence and a medium likelihood.

Accepted Answer

The answer of A serious risk factor probably has:
A) A...

Question 5

One source of information on future risks and the leading indicators that accompany risks is:
A) A brainstorming meeting.
B) The Delphi method.
C) Past history.
D) Multiple assessments.

Accepted Answer

The answer of One source of information on future risks...

Question 6

The probability that investments made to fund the front-end activities will be lost due to project abandonment is:
A) Promotion risk.
B) Political risk.
C) Organizational risk.
D) Financial risk.

Accepted Answer

Promotion risk is the risk that investments made to fund the front-end activities will be lost due to project abandonment.

Question 7

The probability that funds allocated to the project will be insufficient to complete it is:
A) Technical risk.
B) Cost estimate risk.
C) Financing risk.
D) Operating risk.

Accepted Answer

Cost estimate risk refers to the risk that the project budget and funding allocation are inadequate to complete the project successfully. This type of risk may occur due to inaccurate cost estimates or unforeseen expenses during project execution. Therefore, option B is the best choice. Technical risk refers to the risk of failure in technology or design aspects. Financing risk refers to the risk of inadequate financing or funding for the project, and operating risk refers to the risk of losses due to operational failures or disruptions.

Question 8

There is always a chance that the music loving public cannot be convinced of the need to return to the 8-track format for new releases.The probability that we don't sell one million units before the holiday season is:
A) Promotion risk.
B) Market risk.
C) Organizational risk.
D) Financial risk.

Accepted Answer

Market risk refers to the potential loss or reduced profits that may result from unfavorable market conditions, such as a lack of demand for a particular product or service. The given scenario describes the possibility of the public not being convinced to return to the 8-track format, indicating a market risk to the sales of the product. Therefore, choice (B) Market risk is the best choice.

Question 9

A method for conducting risk factor identification that generates ideas but doesn't focus on decision making is:
A) A brainstorming meeting.
B) The Delphi method.
C) Past history.
D) Multiple assessments.

Accepted Answer

A brainstorming meeting is a common method used to generate ideas and identify potential risk factors. This method is useful because it encourages open discussion and allows for a variety of perspectives to be heard. However, it does not necessarily focus on decision making or prioritization of the identified risks.

Question 10

The terpsichorean was familiar with the risks associated with various moves,the accountant knew financial risks forwards and backwards,while the civil engineer could quantify the risks associated with distributed loads on the temporary stage.Their input was used as part of:
A) A brainstorming meeting approach to risk factor identification.
B) The Delphi method approach to risk factor identification.
C) A past history approach to risk factor identification.
D) A multiple assessments approach to risk factor identification.

Accepted Answer

The statement mentions input from multiple individuals with different areas of expertise which suggests a multiple assessments approach to risk factor identification. This approach involves gathering input from various experts in different fields to identify potential risks from different perspectives.

Question 11

The mouse executive board meeting was drawing to a conclusion; the only way they would be able to detect the presence of the cat was to tie a bell around its tail.Under their risk management identification scheme,this would fall under:
A) Commercial risk.
B) Execution risk.
C) Financial risk.
D) Technical risk.

Accepted Answer

The scenario presented falls under technical risk, as it involves devising a solution or method to detect the presence of a cat. Technical risk encompasses risks related to technology, processes, or systems that may impact the success of a project or operation.

Question 12

A project team assesses their primary risk factor's probability of failure with a maturity risk of 0.3,a complexity risk of 0.7,and a dependency risk of 0.8.The probability of failure is:
A) Less than or equal to 0.3.
B) Greater than 0.3 but less than or equal to 0.55.
C) Greater than 0.56 but less than or equal to 0.89.
D) Greater than or equal to 0.9.

Accepted Answer

The probability of failure can be calculated using the formula:
Probability of failure = 1 - (1 - maturity risk) x (1 - complexity risk) x (1 - dependency risk)
= 1 - (1 - 0.3) x (1 - 0.7) x (1 - 0.8)
= 1 - (0.7 x 0.3 x 0.2)
= 1 - 0.042
= 0.958
Therefore, the probability of failure is greater than 0.56 but less than or equal to 0.89, which is answer choice C.

Question 13

The probability that a project to establish infrastructure in a third-world country teetering on the brink of civil war is fraught with:
A) Political risk.
B) Operating risk.
C) Organizational risk.
D) Integration risk.

Accepted Answer

Political risk refers to the potential for negative impacts on a project due to political instability, such as civil war or government instability. In a third-world country that is teetering on the brink of civil war, political risk would be a major concern for any infrastructure project. Operating risk (B) refers to risks related to the day-to-day operations of a project, while organizational risk (C) refers to risks related to the structure and management of an organization. Integration risk (D) refers to risks related to the integration of various project components. While these risks may also be present in a project to establish infrastructure in a third-world country, political risk would be the most significant concern.

Question 14

A project team assigns probabilities of 0.1,0.2,and 0.4 respectively to the maturity,complexity,and dependency categories.The probability of failure can be calculated as:
A) 0.23.
B) 0.33.
C) 0.65.
D) 0.70.

Accepted Answer

The answer of A project team assigns probabilities of 0.1,0.2,and...

Question 15

The marketing team would develop the advertising campaign to promote the newest product but the engineers wanted to keep all product details a secret during development.The service and operations branches of the company were also in the dark,so product rollout was going to be their initiation as well.This project has a very high:
A) Political risk.
B) Operating risk.
C) Organizational risk.
D) Integration risk.

Accepted Answer

The answer of The marketing team would develop the advertising...

Question 16

The probability that legal and managerial structures put together to develop and operate the project will NOT perform well is:
A) Operating risk.
B) Political risk.
C) Organizational risk.
D) Integration risk.

Accepted Answer

The probability that the legal and managerial structures put together to develop and operate the project will not perform well is related to the organizational risk. This risk arises due to deficiencies in the organizational structure, policies or procedures, and the management of the project.

Question 17

The probability that a project will overrun its allocated duration is:
A) Volume market risk.
B) Price market risk.
C) Integration risk.
D) Schedule risk.

Accepted Answer

Schedule risk refers to the probability that a project will not finish within its allotted timeframe. Therefore, option D is the correct answer. Option A refers to market demand, B refers to pricing, and C refers to the coordination between different project tasks or components, none of which are related to project duration.

Question 18

The house had almost been framed when an F-5 tornado ripped across the plains and turned the house back into a lumber pile,albeit not stacked as neatly as it was originally.The homeowner's fears of:
A) Technical risks had come true.
B) Operating risks had come true.
C) Acts of God had come true.
D) Environmental risks had come true.

Accepted Answer

The tornado that destroyed the house is an example of an "Act of God," which is a term used to describe natural disasters or other events that are beyond human control or intervention. This is not related to technical, operating, or environmental risks.

Question 19

What are the four distinct stages of systematic risk management and what takes place at each?

Accepted Answer

The answer of What are the four distinct stages of...

Question 20

With a maturity risk of 0.3,a complexity risk of 0.4,and a dependency risk of 0.5,the probability of failure is:
A) About 0.3.
B) About 0.4.
C) About 0.5.
D) About 0.6.

Accepted Answer

The answer of With a maturity risk of 0.3,a complexity...

Quiz 7: Risk Management

Based on the projected selling price of $20 per unit,the manufacturer invested a substantial portion of its available cash in a machine that could produce twenty-thousand gumballs in an hour.If consumers weren't willing to pay this much for gum,then the manufacturer faced significant:

The probability that project revenues will NOT be sufficient to repay the debts is:

A method for conducting risk factor identification that consolidates the judgments of isolated anonymous respondents is:

A serious risk factor probably has:

One source of information on future risks and the leading indicators that accompany risks is:

The probability that investments made to fund the front-end activities will be lost due to project abandonment is:

The probability that funds allocated to the project will be insufficient to complete it is:

There is always a chance that the music loving public cannot be convinced of the need to return to the 8-track format for new releases.The probability that we don't sell one million units before the holiday season is:

A method for conducting risk factor identification that generates ideas but doesn't focus on decision making is:

The terpsichorean was familiar with the risks associated with various moves,the accountant knew financial risks forwards and backwards,while the civil engineer could quantify the risks associated with distributed loads on the temporary stage.Their input was used as part of:

The mouse executive board meeting was drawing to a conclusion; the only way they would be able to detect the presence of the cat was to tie a bell around its tail.Under their risk management identification scheme,this would fall under:

A project team assesses their primary risk factor's probability of failure with a maturity risk of 0.3,a complexity risk of 0.7,and a dependency risk of 0.8.The probability of failure is:

The probability that a project to establish infrastructure in a third-world country teetering on the brink of civil war is fraught with:

A project team assigns probabilities of 0.1,0.2,and 0.4 respectively to the maturity,complexity,and dependency categories.The probability of failure can be calculated as:

The probability that legal and managerial structures put together to develop and operate the project will NOT perform well is:

The probability that a project will overrun its allocated duration is:

The house had almost been framed when an F-5 tornado ripped across the plains and turned the house back into a lumber pile,albeit not stacked as neatly as it was originally.The homeowner's fears of:

What are the four distinct stages of systematic risk management and what takes place at each?

With a maturity risk of 0.3,a complexity risk of 0.4,and a dependency risk of 0.5,the probability of failure is: