Risk Management Flashcards
6 cards from real MEM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Risk Management flashcards as text
In quantitative risk analysis, what is Monte Carlo simulation used for?
Answer: Running thousands of scenarios to model the probability distribution of project outcomes
Monte Carlo simulation uses repeated random sampling across input variable distributions to produce a probabilistic range of possible project outcomes (cost, schedule, etc.).
What is the primary purpose of a 'risk breakdown structure' (RBS)?
Answer: To hierarchically organize risk sources to ensure comprehensive identification
The RBS organizes potential risk sources into a hierarchical structure (e.g., technical, external, organizational) to systematically identify risks and ensure none are overlooked.
Which of the following best describes 'residual risk'?
Answer: The risk that remains after all mitigation actions have been implemented
Residual risk is the remaining level of exposure after planned risk response actions have been fully implemented, which may still require monitoring or acceptance.
In enterprise risk management (ERM), what distinguishes it from traditional project risk management?
Answer: ERM takes a holistic, organization-wide view of risk across all functions and strategic objectives
ERM integrates risk management across all organizational levels and functions, aligning risk tolerance with strategic objectives rather than focusing on individual project risks.
What is a 'contingency reserve' in project risk management?
Answer: Time or cost buffer allocated to cover identified risks that may occur
A contingency reserve is planned budget or schedule buffer allocated to address identified risks (known unknowns) that have a probability of occurring during the project.
Which risk response strategy is most appropriate when a project risk cannot be avoided, mitigated, or transferred?
Answer: Risk acceptance
Risk acceptance acknowledges that a risk exists but no cost-effective response is available; the team monitors it and develops contingency plans if it occurs.