Chapter 7 - Risk Management

Question 1

What leads to uncertainty in a project?

Answer 1

Estimation causes uncertainty, because an estimate is not exact.

Question 2

How does a project risk management approach provide early warning for problems?

Answer 2

By actively looking for risk, as opposed to reacting to it.

Question 3

What are some of the common mistakes of project risk management?

Answer 3

Some common risk management mistakes:

• Not understanding why you should manage risk.
• Not taking time to manage risk.
• Not identifying and assessing risk in a standardized way.

Question 4

What is required for effective and successful project risk management?

Answer 4

For effective risk management, you need the following:

• Stakeholder commitment.
• Risk ownership
• Unique handling of unique risks

Question 5

What is project risk?

Answer 5

Risk is an uncertain event or condition such that, if it occurs, has a positive or negative effect on one or more project objectives.

Question 6

What are the six project risk management processes?

Answer 6

The six steps of project risk management are:

• Create a risk plan
• Identify risks
• Analyze risks
• Develop risk strategies
• Monitor and control risks
• Respond and evaluate risk

Question 7

Why can identifying project risks be difficult?

Answer 7

Identifying risks can be a challenge because it is often easy to identify the symptom of a risk, as opposed to the root cause.

Question 8

What is a known risk?

Answer 8

A known risk is an even that is known to occur. Death and taxes, but in this case, we can do something about them.

Question 9

What is a known-unknown risk?

Answer 9

A known-unknown risk is a risk that you can be certain will occur, but with unknown elements, such as intensity, magnitude, etc.

Question 10

What is an unknown-unknown risk?

Answer 10

An unknown-unknown risk is a risk we’re not expecting.

Question 11

What is the difference between an internal and external risk?

Answer 11

Internal risks are those that can be controlled by the project manager or team, and external is the inverse.

Question 12

What are learning cycles, and how can they identify risk?

Answer 12

Learning cycles are when the project team and stakeholders identify facts, assumptions, and questions to be answered, and from them, find risks.

Question 13

Describe the nominal group technique.

Answer 13

The nominal group technique, or NGT, is where everyone anonymously writes down ideas on paper, and then each is discussed as a group. When done, everyone privately ranks them all, which is then discussed, and then privately re-ranked.

Question 14

How can interviewing be used to identify risk?

Answer 14

Interviewing allows for additional points of view from stakeholders, which can aid in finding risk, but the quality of the information can be sketch.

Question 15

How do checklists help prevent project risk? What are some cons?

Answer 15

Checklists help things that need to be done get done, but they can lead to a false sense of security if not everything’s on the list.

Question 16

What is a fishbone/Ishikawa diagram, and how can it identify risk?

Answer 16

Also known as a cause/effect diagram, the Ishikawa diagram, identifies a risk, then attempts to determine all the possible causes that might cause that to happen, creating branching possibilities. These branches are then examined to determine what might cause THEM.

Question 17

What’s the purpose of a risk impact table?

Answer 17

A risk impact table shows the potential impact risks may actually have, crossing the likelihood of a risk occurring with the impact it might have, and giving a 0-10 impact rating.

Question 18

What’s the difference between a discreet and a continuous probability distribution?

Answer 18

A discreet probability distribution uses integers and whole numbers, where fractions would not make sense. This would be like, flipping a coin, or casualty counts. A continuous distribution allows for subdivision.

Question 19

What are the four risk strategies in regards to advantageous situations?

Answer 19

The four risk strategies are:

• Exploitation: Taking advantage of the situation.
• Sharing of Ownership: Insurance, basically, spread it around.
• Enhancement: try to make it more likely.
• Acceptance: Keep an open mind, but don’t plan on it.

Question 20

What’s the difference between a management reserve and a contingency reserve?

Answer 20

A management reserve is controlled by management, and is not part of a project’s budget, whereas a contingency reserve is part of the project’s budget, and is trigger-based.