PMBOK Managing Project Risks 3 — Questions and Answers
Question 1: What does a risk threshold represent in project risk management?
- The maximum budget allocated for risk responses
- The level of risk exposure acceptable to the organization (Correct answer)
- The number of risks allowed in a single project phase
- The minimum probability required to log a risk
Correct answer: The level of risk exposure acceptable to the organization
Risk thresholds define the level of risk exposure that the organization or stakeholders are willing to accept before action is required.
Question 2: Which qualitative risk analysis tool ranks risks based on their probability and impact scores?
- Monte Carlo Simulation
- Probability and Impact Matrix (Correct answer)
- Expected Monetary Value Analysis
- Sensitivity Analysis
Correct answer: Probability and Impact Matrix
The Probability and Impact Matrix maps each risk's likelihood against its potential effect to assign a priority rating.
Question 3: A project manager adds 15% to the project budget to cover unforeseen risks that have not been specifically identified. This is an example of:
- Contingency reserve
- Management reserve (Correct answer)
- Risk transfer
- Cost baseline adjustment
Correct answer: Management reserve
Management reserve covers unknown-unknown risks and is held outside the cost baseline, controlled by management.
Question 4: In quantitative risk analysis, which technique uses repeated random sampling to model the range of possible project outcomes?
- Delphi Technique
- Monte Carlo Simulation (Correct answer)
- SWOT Analysis
- Influence Diagram
Correct answer: Monte Carlo Simulation
Monte Carlo Simulation runs thousands of iterations with random variable inputs to produce a probability distribution of outcomes.
Question 5: A secondary risk is BEST defined as:
- A risk that occurs after project closure
- A risk arising directly from implementation of a risk response (Correct answer)
- A risk transferred to another project
- A residual risk that cannot be mitigated
Correct answer: A risk arising directly from implementation of a risk response
Secondary risks are new risks introduced as a direct result of implementing a risk response action.
Question 6: Which risk response strategy is appropriate when the potential upside of an opportunity is too valuable to leave to chance?
- Share
- Enhance
- Exploit (Correct answer)
- Accept
Correct answer: Exploit
Exploit eliminates uncertainty by ensuring the opportunity definitely occurs, such as assigning the best resources to guarantee success.
Question 7: A workaround in risk management refers to:
- A pre-planned contingency response activated when a trigger occurs
- An unplanned response to an unanticipated risk event that has occurred (Correct answer)
- A strategy to avoid a risk by changing project scope
- A cost reserve set aside for identified risks
Correct answer: An unplanned response to an unanticipated risk event that has occurred
Workarounds are unplanned responses developed on the fly when an unidentified risk materializes during project execution.
PMBOK Managing Project Risks 3
What does a risk threshold represent in project risk management?