Risk Flashcards
“The following risk has been recorded in the risk register:
““As the singer is new, there is a risk that the music album sales will not exceed the production costs, leading to the benefit no longer being achievable.””
In response to this risk, an alternative graphic design company will be sought to reduce costs.
Here are three items of information to be included in the risk register.
Under which heading of the risk register (A-F) should the information be recorded?”
“A. Probability, impact and expected value.
B. Proximity.
C. Risk category.
D. Risk status.
E. Risk owner.
F. Risk actionee.”
1. The project manager has been instructed to search for a graphic design company that can produce the artwork more cheaply
F. Risk actionee.
Correct. The risk actionee is the person(s) who will implement the action(s) described in the risk response. This may or may not be the same person as the risk owner. Ref A.25.2
“The following risk has been recorded in the risk register:
““As the singer is new, there is a risk that the music album sales will not exceed the production costs, leading to the benefit no longer being achievable.””
In response to this risk, an alternative graphic design company will be sought to reduce costs.
Here are three items of information to be included in the risk register.
Under which heading of the risk register (A-F) should the information be recorded?”
“A. Probability, impact and expected value.
B. Proximity.
C. Risk category.
D. Risk status.
E. Risk owner.
F. Risk actionee.”
2. If a graphic design company can be found that can produce the artwork more cheaply, production costs are predicted to be significantly reduced
A. Probability, impact and expected value.
Correct. Probability, impact and expected value. It is helpful to estimate the inherent values (pre-response action) and residual values (post-response action). These should be recorded in accordance with the project’s chosen scales. Ref A.25.2
“The following risk has been recorded in the risk register:
““As the singer is new, there is a risk that the music album sales will not exceed the production costs, leading to the benefit no longer being achievable.””
In response to this risk, an alternative graphic design company will be sought to reduce costs.
Here are three items of information to be included in the risk register.
Under which heading of the risk register (A-F) should the information be recorded?”
“A. Probability, impact and expected value.
B. Proximity.
C. Risk category.
D. Risk status.
E. Risk owner.
F. Risk actionee.”
3. Sales of the album will occur after the project has closed.
B. Proximity.
Correct. Proximity typically states how close to the present time the risk event is anticipated to happen (e.g. imminent, within the management stage, within the project, beyond the project). Proximity should be recorded in accordance with the project’s chosen scales. Ref A.25.2
During stage 3, the singer’s agent informed the project manager that the singer may be invited to perform at an international festival. If there is interest from an international audience, the record company will need extra money to expand their distribution channels. The project manager has created a provisional plan to cover the activities required, should the singer be invited.
From which budget should the extension of the distribution channels be funded, and why?
The risk budget, because it should include the funds to cover a contingent plan.
Correct. The change to the distribution channels is a contingent plan to be carried out, if the opportunity materializes that the singer is invited to the festival and there is an increase in international interest. Management responses to project threats and opportunities should be funded from the risk budget, if this has been established within the project’s budget. Ref tab 10.3, 10.3.7
“The following risk has been recorded in the risk register:
““As the singer is new to the market, there is a threat that the music album sales will not exceed the production costs, which would result in the project no longer being viable””.
The record company plans to find an alternative graphic design company, to lower the overall production costs.”
Which risk response is being applied, and why?
Reduce a threat’, because the threat is being made less likely to occur and would have less impact.
Correct. ‘Reduce a threat’ is when a definite action is taken to change the probability and/or the impact of the risk. Reducing production costs by finding a cheaper supplier would make it less likely that the costs exceed the sales, and should reduce the amount by which they exceed sales, if the threat materializes. Ref tab 10.3
“When negotiating a contract with the singer, information was received that the singer may sign a contract with another record company.
Here are three actions relating to the management of this risk.
During which activity relating to the recommended risk management procedure (A-F) should they occur?”
“A. Identify the risk.
B. Estimate the risk.
C. Plan the response.
D. Implement the response.
E. Communicate about the risk.
F. Fund the response from the risk budget.”
1. The reason that the singer may sign with another company is that this other company may offer more favourable terms.
A. Identify the risk.
Correct. This identifies the risk cause that the singer may be offered more favourable terms by another record company. Ref 10.4.1.2
“When negotiating a contract with the singer, information was received that the singer may sign a contract with another record company.
Here are three actions relating to the management of this risk.
During which activity relating to the recommended risk management procedure (A-F) should they occur?”
“A. Identify the risk.
B. Estimate the risk.
C. Plan the response.
D. Implement the response.
E. Communicate about the risk.
F. Fund the response from the risk budget.”
2. The contract terms are updated to make them more favourable.
D. Implement the response.
Correct. This is an ‘implement’ the response activity as it is an action to reduce the chances of the singer signing with the other company. Ref 10.4.4
“When negotiating a contract with the singer, information was received that the singer may sign a contract with another record company.
Here are three actions relating to the management of this risk.
During which activity relating to the recommended risk management procedure (A-F) should they occur?”
“A. Identify the risk.
B. Estimate the risk.
C. Plan the response.
D. Implement the response.
E. Communicate about the risk.
F. Fund the response from the risk budget.”
3. The Contracts Manager signs a revised contract with more favourable terms than the previous offer.
D. Implement the response.
Correct. This is an ‘implement’ the response activity as it is an action to reduce the chances of the singer signing with the other company. Ref 10.4.4
The singer has signed a contract with the record company and has been asked to sing at a large international festival on a Friday night. This may increase international sales of the album that is being produced, even though the audience is usually bigger on a Saturday. The project manager has agreed to fund the singer’s performance at the festival.
Has the project manager enhanced the opportunity, and why?
No, because the record company should negotiate to have the singer perform on Saturday.
Correct. Funding the singer to perform at the festival would exploit the opportunity offered thus ensuring that the worldwide audience is reached. Ref tab 10.3
“The Marketing Director will analyze the opinions of focus groups to check that the album will be marketable and generate sufficient sales. At the end of the initiation stage, the following risk was recorded in the risk register:
““There is a threat that the project will be no longer viable which would result in the project needing to be stopped.”””
How well does this identify the risk, and why?
It identifies it poorly, because the source of the risk has not been understood so the relevant risk responses cannot be selected.
Correct. The risk cause should describe the source of the risk. An important aspect of identifying risks is being able to provide a clear and unambiguous expression of each one. Without understanding the risk cause, it is not possible to manage the risk effectively. Ref 10.4.1.2
