Risk Management Flashcards

Which of the following BEST describes a risk appetite?

Answer: The level of risk exposure an organization is willing to accept

Risk appetite refers to the degree of uncertainty an organization is willing to accept in pursuit of its objectives.

A tornado diagram is used in which type of risk analysis?

Answer: Sensitivity analysis

Tornado diagrams are a key output of sensitivity analysis, displaying which risks have the greatest potential impact on project objectives.

What is the purpose of a fallback plan in risk management?

Answer: To replace the contingency plan if it proves ineffective

A fallback plan is implemented if the primary contingency response fails, serving as a secondary layer of defense.

A project manager is enhancing conditions that make a positive risk more likely to occur. This is an example of:

Answer: Enhancing

Enhancing is a positive risk (opportunity) response strategy that increases the probability or impact of an opportunity.

Which process in risk management involves determining which risks may affect the project and documenting their characteristics?

Answer: Identify Risks

The Identify Risks process is focused on finding potential risk events and documenting them in the risk register.

Management reserves differ from contingency reserves in that management reserves are:

Answer: For unknown unknowns and require executive approval to use

Management reserves address unknown unknowns and are held by senior management, requiring their approval before use by the project manager.

A project manager wants to gather risk information from experts anonymously to avoid groupthink. Which technique should be used?

Answer: Delphi technique

The Delphi technique uses anonymous rounds of expert questionnaires to gather consensus while preventing dominant personalities from influencing responses.