Self Test

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1. 

Which of the following is not an input to risk management planning?

1. The project charter

2. Risk identification

3. Defined roles and responsibilities

4. WBS

2. 

Frances is the project manager of the LKJ Project. Which of the following techniques will she use to create the risk management plan?

1. Risk tolerance

2. Status meetings

3. Planning meetings

4. Variance meetings

3. 

Which of the following is the output of risk management planning?

1. Roles and responsibilities

2. Operational transfer issues

3. Risk response plan

4. Risk management plan

4. 

You are the project manager of the GHK Project. You and the manufacturer have agreed to substitute the type of plastic used in the product to a slightly thicker grade should there be more than a seven percent error in production. The thicker plastic will cost more and require the production to slow, but the errors should diminish. This is an example of which of the following?

1. Threshold

2. Tracking

3. Budgeting

4. JIT manufacturing

5. 

A person's willingness to tolerate risk is known as ________________.

1. The utility function

2. Herzberg's Theory of Motivation

3. Risk acceptance

4. The risk-reward ratio

6. 

A risk trigger is also called which of the following?

1. A warning sign

2. A delay

3. A cost increase

4. An incremental advancement of risk

7. 

The customers of the project have requested additions to the project scope. The project manager brings notice that additional risk planning will need to be added to the project schedule. Why?

1. The risk planning should always be the same amount of time as the activities required by the scope change.

2. Risk planning should always occur whenever the scope is adjusted.

3. Risk planning should only occur at the project manager's discretion.

4. The project manager is incorrect; risk planning does not need to happen at every change in the project.

8. 

The risks of financial gain or loss are called _________________.

1. Business risks

2. Financial risks

3. Organizational risks

4. Functional risks

9. 

_______________ include(s) fire, theft, or injury, and offer(s) no chance for gain.

1. Business risks

2. Pure risks

3. Risk acceptance

4. Life risks

10. 

Complete this sentence: a risk is a(n )_____________ occurrence that can affect the project for good or bad.

1. Known

2. Potential

3. Uncertain

4. Known unknown

11. 

When should risk identification happen?

1. As early as possible in the initiation process

2. As early as possible in the planning process

3. As early as possible in the controlling process

4. As early as possible in the execution process

12. 

You are the project manager of the KLJH Project. This project will last two years and has 30 stakeholders. How often should risk identification take place?

1. Once at the beginning of the project

2. Throughout the execution processes

3. Throughout the project

4. Once per project phase

13. 

Risk identification is considered to be ___________________. (Choose the best answer.)

1. Iterative

2. Self-led

3. Mandatory

4. Optional

14. 

You are the project manager for a project that will create a new and improved web site for your company. Currently, your company has over eight million users around the globe. You would like to poll experts within your organization with a simple, anonymous form asking for any foreseeable risks with the design, structure, and intent of the web site. With the collected information, subsequent anonymous polls are submitted to the group of experts. This is an example of ___________________.

1. Risk identification

2. A trigger

3. An anonymous trigger

4. The Delphi Technique

15. 

Which of the following describes SWOT?

1. Analysis of strengths, weakness, options, and timing

2. Analysis of strengths, weakness, opportunities, and threats

3. An elite project team that comes in and fixes project risks and threats

4. Ratings of 1 to 100

16. 

Which risk analysis provides the project manager with a risk ranking?

1. Quantifiable

2. Qualitative

3. The utility function

4. SWOT analysis

17. 

A table of risks, their probability, impact, and a number representing the overall risk score is called a ________________.

1. Risk table

2. Risk matrix

3. Quantitative matrix

4. Qualitative matrix

18. 

You are presented with the following table:

Risk Event	Probability	Impact Cost/Benefit	Ex$V
1	.20	-4000
2	.50	5000
3	.45	-300
4	.22	500
5	.35	-4500

What is the Ex$V for Risk Event 3?

1. $135

2. -$300

3. $45

4. -$135

19. 

You are presented with the following table:

Risk Event	Probability	Impact Cost/Benefit	Ex$V
1	.35	-4000
2	.40	50000
3	.45	-300000
4	.30	50000
5	.35	-45000

Based on the preceding table, what is the amount needed for the contingency fund?

1. Unknown with this information

2. 249,000

3. 117,150

4. 15750

20. 

The water sanitation project manager has determined the risks associated with handling certain chemicals are too high. He has decided to allow someone else to complete this portion of the project, and so has outsourced the handling and installation of the chemicals and filter equipment to an experienced contractor. This is an example of which of the following?

1. Avoidance

2. Acceptance

3. Mitigation

4. Transference

21. 

A project manager and the project team are actively monitoring the pressure gauge on a piece of equipment. Sarah, the engineer, recommends a series of steps to be implemented should the pressure rise above 80 percent. The 80-percent mark represents what?

1. An upper control limit

2. The threshold

3. Mitigation

4. A workaround

22. 

You are presented with the following table:

Risk Event	Probability	Impact Cost/Benefit	Ex$V
1	.20	-4000
2	.50	5000
3	.45	-300
4	.22	500
5	.35	-4500
6

Complete Risk 6 based on the following information: Marty is 60 percent certain that he can get the facility needed for $45,000, which is $7000 less than what was planned for.

1. .60, 45,000, 27,000

2. .60, 52,000, 31,200

3. .60, 7,000, 4200

4. .60, -7,000, -4200

23. 

How can a project manager determine whether it is better to make or buy a product?

1. Decision Tree Analysis

2. Fishbone model

3. Ishikawa diagram

4. ROI Analysis

24. 

Which of the following can determine multiple scenarios with risk and probability of impact?

1. Decision trees

2. Monte Carlo simulations

3. Pareto charts

4. Gantt charts

25. 

A project can have many risks with high-risk impact scores, but have an overall low risk score. How is this possible?

1. The risk scores are graded on a bell curve.

2. The probability of each risk is low.

3. The impact of each risk is not accounted for until it comes to fruition.

4. The risks are rated HML.

Answers

1. 

þ B. Risk identification is not an input to risk management planning.

ý A, C, and D are all incorrect. The project charter, defined roles and responsibilities, and the WBS are all inputs to risk management planning.

2. 

þ C. Planning meetings are used to create the risk management plan. The project manager, project team leaders, key stakeholders, and other individuals with the power to make decisions regarding risk management attend the meetings.

ý Choices A, B, and D are incorrect as these choices do not fully answer the question.

3. 

þ D. The only output of risk management planning is the risk management plan.

ý A is incorrect; roles and responsibilities are an input to the risk management planning process. B, operational transfer issues, may have associated risks, but they are not an output of the risk management planning process. C, the risk response plan, is not an output of risk management planning. It is an output of risk response planning.

4. 

þ A. An error value of seven percent represents the threshold the project is allowed to operate under. Should the number of errors increase beyond seven percent, the current plastic will be substituted.

ý B is incorrect since tracking is the documentation of a process through a system or workflow, or the documentation of events through the process. C, budgeting, is incorrect. D, JIT manufacturing, is a scheduling approach to ordering the materials only when they are needed in order to keep inventory costs down.

5. 

þ A. The utility function describes a person's willingness to tolerate risk.

ý B, is incorrect; Herzberg's Theory of Motivation is an HR theory that describes motivating agents for workers. C is also incorrect; risk acceptance describes the action of allowing a risk to exist because it is deemed low in impact, low in probability, or both. D, the risk-reward ratio, is incorrect. This describes the potential reward for taking a risk in the project.

6. 

þ A. Risk triggers can also be known as warning signs. Triggers signal that a risk is about to happen or has happened.

ý B, C, and D are all incorrect, as these answers do not properly describer a risk trigger.

7. 

þ B. When the scope has been changed, the project manager should require risk planning to analyze the additions for risks to the project success.

ý A is incorrect; the scope changes may not require the same amount of time as the activities needed to complete the project changes. C is incorrect because risk planning should not occur at the project manager's discretion, but instead should be based on evidence within the project and the policies adopted in the risk management plan. D is also incorrect; when changes are added to the project scope, risk planning should occur.

8. 

þ A. Business gains are directly tied to the risk of financial gains or loss.

ý Choices B, C, and D are not relevant terms.

9. 

þ B. Pure risks are the risks that could threaten the safety of the individuals on the project.

ý Choice A is incorrect because business risks affect the financial gains or loss of a project. C and D are incorrect since these terms are not relevant.

10. 

þ C. Risks are not planned, they are left to chance. The accommodation and the reaction to a risk can be planned, but the event itself is not planned. If risks could be planned, Las Vegas would be out of business.

ý A, B, and D are all incorrect since these terms do not accurately complete the sentence.

11. 

þ B. Risk identification is a planning process and should happen as early as possible to allot adequate time for risk reaction planning.

ý A, C, and D are all incorrect because risk identification does not happen as part of the initiation, controlling, or execution processes.

12. 

þ C. Risk identification happens throughout the project. Recall that planning is iterative; as the project moves towards completion, new risks may surface that call for identification and planned responses.

ý A is incorrect; risk identification should happen throughout the project, not just at the beginning. B is incorrect because risk identification is part of planning. D is incorrect because the nature of the project phase may require and reveal more than one opportunity for risk identification.

13. 

þ A. Risk identification is an iterative process that should happen throughout the project life.

ý B is incorrect since risk identification often requires intense analysis, team involvement, and experts to lead the process. C is incorrect; while risk identification may be considered mandatory, iterative is a better description because risk identification happens over and over. D is incorrect; risk identification is not optional.

14. 

þ D. An anonymous poll allowing experts to freely submit their opinion without fear of backlash is an example of the Delphi Technique.

ý A, B, and C are incorrect; these choices do not accurately answer the question.

15. 

þ B. SWOT analysis is part of risk identification and examines the strengths, weakness, opportunities, and threats of the project to make certain all possibilities for risk identification are covered.

ý A is incorrect because SWOT examines all four perspectives. C and D are incorrect because these ratings are part of quantitative-qualitative risk analysis.

16. 

þ B. The risk ranking is based on the very high, high, medium, low, and very low attributes of the identified risks.

ý A is incorrect because it is not relevant to the questions. C is incorrect; utility function describes an organization's tolerance for risk. D, SWOT analysis, is part of risk identification.

17. 

þ B. A table of risks, their probability, and impact equate to a risk score in a risk matrix.

ý A is incorrect since it does not fully answer the questions. C and D are incorrect because a risk matrix can be used in both quantitative and qualitative risk analysis.

18. 

þ D. Risk Event 3 has a probability of 45 percent and an impact cost of -$300, which equates to -$135.

ý A, B, and C are all wrong because the values are incorrect answers for the formula.

19. 

þ C. The calculated amount for each of the risk events is shown in the following table:

Risk Event	Probability	Impact Cost/Benefit	Ex$V
1	0.35	-4000	-1400
2	0.4	50000	20000
3	0.45	-300000	-135000
4	0.3	50000	15000
5	0.35	-45000	-15750
			-117150

ý A, B, and D are incorrect answers because they do not reflect the contingency amount needed for the project based on the preceding table.

20. 

þ D. Because the risk is not eliminated but transferred to someone else or another entity, it is considered transference.

ý A is incorrect because the risk still exists, but it is handled by another entity. B is incorrect because the project manager has not accepted the risk, deciding instead to allow another entity to deal with it. C is incorrect; the risk has not been mitigated in the project.

21. 

þ B. The 80-percent mark is a threshold.

ý A is incorrect; an upper control limit is a boundary for quality in a control chart. C is incorrect; mitigation is a planned response should a risk event happen. D is incorrect; a workaround is an action to bypass the risk event.

22. 

þ C. Marty is 60 percent certain he can save the project $7000. The $4200 represents the 60-percent certainty of the savings.

ý A, B, and D are all incorrect since these values do not reflect the potential savings of the project.

23. 

þ A. A decision tree model can separate the pros and cons of buying versus building.

ý B and C are incorrect; a fishbone diagram and an Ishikawa diagram show cause and effect. D is incorrect; ROI analysis does not answer the question as fully as a decision tree.

24. 

þ B. Monte Carlo simulations can reveal multiple scenarios and examine the risks and probability of impact.

ý A, decision trees, help guide the decision making process. C, a Pareto chart, helps identify the leading problems in a situation. D, Gantt charts, compare the lengths of activities against a calendar in a bar chart format.

25. 

þ B. A risk can have a very high impact on the project, but inversely have an extremely low probability score.

ý A is incorrect and not relevant to the scenario. C is not a true statement. D is also incorrect; a model using high, medium, low versus a numbering system would not alter the overall high or low risk score of the project.

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