8100 Professional Level Exam Risk Assessment and Management 1 — Questions and Answers
Question 1: How is risk 'probability' defined in a professional risk assessment context?
- The likelihood that a specific risk event will occur (Correct answer)
- The financial impact of a risk event
- The number of risks identified in a project
- The time required to recover from a risk event
Correct answer: The likelihood that a specific risk event will occur
Probability quantifies how likely it is that a risk will materialize, often expressed as a percentage or on a qualitative scale (low, medium, high).
Question 2: What is a 'risk register' in professional practice?
- A document that records identified risks, their analysis, and planned responses (Correct answer)
- A log of all incidents that have already occurred
- A list of approved risk tolerances set by management
- A regulatory filing for insurance purposes
Correct answer: A document that records identified risks, their analysis, and planned responses
The risk register is the central repository for all identified risks, including probability, impact, owner, and response strategy.
Question 3: What is the difference between a 'risk' and an 'issue' in professional risk management?
- A risk is a potential future event; an issue is a problem that has already occurred (Correct answer)
- A risk is more serious than an issue
- An issue can be planned for; a risk cannot
- They are the same thing described differently
Correct answer: A risk is a potential future event; an issue is a problem that has already occurred
Risks are uncertain future events that may affect objectives, while issues are current problems requiring immediate resolution.
Question 4: What does a 'probability-impact matrix' help professionals do?
- Prioritize risks by combining their likelihood and potential effect into a risk score (Correct answer)
- Calculate the exact dollar value of each risk
- Assign risk owners randomly
- Schedule risk reviews on a calendar
Correct answer: Prioritize risks by combining their likelihood and potential effect into a risk score
The probability-impact matrix visually categorizes risks into high, medium, and low priority zones to focus management attention on the most critical risks.
Question 5: Which risk analysis technique uses repeated simulations to model the probability distribution of possible project outcomes?
- Monte Carlo simulation (Correct answer)
- SWOT analysis
- Delphi technique
- Sensitivity analysis
Correct answer: Monte Carlo simulation
Monte Carlo simulation runs thousands of scenarios with variable inputs to produce a probability distribution of outcomes such as project cost or duration.
Question 6: What is 'residual risk' in professional risk management?
- The risk that remains after risk responses have been implemented (Correct answer)
- The original risk before any mitigation
- Risk caused by the response action itself
- Risk transferred to a third party
Correct answer: The risk that remains after risk responses have been implemented
Residual risk is the exposure that persists even after planned risk responses have been applied; it must be accepted or subject to further treatment.
8100 Professional Level Exam Risk Assessment and Management 1
How is risk 'probability' defined in a professional risk assessment context?