Risk questions Flashcards
(14 cards)
107RISK
A project is at the multi-functional planning phase. The project manager realizes that producing a complex application is not feasible with the current number of resources and decides to hire more resources for the production of the application. The project manager identifies temporary resources and signs a service level agreement (SLA) with them. Which risk response strategy does this scenario exemplify?
SELECT THE CORRECT ANSWER
Mitigate
Transfer
Accept
Avoid
Correct Option:D
EXPLANATION
The risk to the project was posed by insufficient resources. The risk was Avoided by hiring additional resources. PMBOK Guide Sixth Edition (2018) PMI/PMI/11.5.2.4/443
125RISK
A project is being planned in a remote area with limited access to vehicles and equipment. The project manager proposes that the company deliver all heavy equipment themselves despite the significant expense. The project manager will take full responsibility for this activity. What type of risk response is the project manager demonstrating?
SELECT THE CORRECT ANSWER
Transfer
Mitigate
Accept
Avoid
Correct Option:C
EXPLANATION
Risk acceptance is a risk response strategy whereby the project team decides to acknowledge the risk and not take any action unless the risk occurs. PMBOK Guide Sixth Edition (2018) PMI/PMI/11.5.2.4/443
41RISK
As a manager on a project, you have to ensure that the project delivers within the scheduled timelines with minimal rework and customer delight. For some time now, the project work is proceeding smoothly with a CPI and SPI a perfect 1. One of your team members approaches you and indicates the possible need for a long vacation on personal grounds two months from now. You look up the schedule and find that this team member is scheduled to execute activities that are on the critical path, and the team member’s absence in two months’ time would cause a delay in schedule. You decide to take some action and reschedule task allocation to ensure that this team member is not planned to work on any of the critical path activities. What did you just do?
SELECT THE CORRECT ANSWER
Mitigate the risk
Avoid the risk
Transfer the risk
Exploit the risk
Correct Option:B
EXPLANATION
You have avoided the risk. By interchanging the tasks, you have ensured that the resource who wants to go on a long vacation does not work on critical path activities. There is no question of exploiting the risk as this is not a positive risk. This is not a case of risk mitigation since you have neither created a backup plan nor come up with an alternate strategy.
48Your company has won a large project’s administering funds for one of the fund houses. The project work has been going smoothly, and the customer has been praising the work done so far. The client has planned a visit the next month to go over the plans for the next phase of the project as well as to meet with the project team. Your senior management realizes that this client could potentially need additional capabilities in the derivatives segment. Your company has a strong exposure to this segment, having executed numerous similar projects. Your senior manager also invites key managers from the derivatives segment to showcase the organization’s abilities in the derivatives vertical. What is this an example of?
SELECT THE CORRECT ANSWER
Mitigating the risk
Avoiding the risk
Transferring the risk
Exploiting the risk
EXPLANATION
This is an example of exploiting the risk. The client is happy with the work progress, and there might also be an opportunity that the client could be interested in the derivatives segment. This opportunity could lead to more business. By inviting key managers from the derivatives segment, you are enhancing the possibility of generating additional revenue. Hence, this is an example of exploiting the risk. Note that this is a positive risk.
110RISK
The project you’re working on is proceeding smoothly with a CPI and SPI a perfect 1. One of your team members tells you she might need some time off two months from now. You look up the schedule and find that this team member happens to be scheduled to execute activities that are on the critical path and her absence in two months’ time would cause a delay in schedule. You ask the team member to start regular knowledge transfers to two trainees. Though the trainees are relatively inexperienced, they would together be able to handle the tasks. What did you just do?
SELECT THE CORRECT ANSWER
Mitigate the risk
Avoid the risk
Transfer the risk
Exploit the risk
Correct Option:A
EXPLANATION
You have mitigated the risk. By asking for the trainees to be trained, you have created a Risk response strategy. Should this team member go on leave, the trainees will execute the task. So, you have not avoided the risk. Again, there is no question of exploiting the risk as this is not a positive risk. This is not a case of Risk transfer either, so the correct answer is Risk Mitigation.
131 RISK
You are out for lunch with a fellow project manager. She is in charge of a project that deals with laying out electrical cables across two towns. As you listen to the plan of the layout, you realize that the cabling would cover a neighborhood with a history of criminal problems. You advise your fellow team manager that it would be prudent to insure the copper cables through a theft insurance. You also advise her regarding which insurance companies would give her the best insurance covers against theft. Which risk response strategy did you just adopt?
SELECT THE CORRECT ANSWER
Risk mitigation
Risk avoidance
Risk transfer
Risk acceptance
Correct Option:C
EXPLANATION
This is an example of Risk transfer as you have advised your fellow manager to insure against theft. Note that this does not eliminate the risk. The risk is simply to be borne by the insurance company. It is also worthwhile to note that the transfer of negative risks comes with a premium to be paid to the party responsible for handling the risk. In this case the insurance company would need to be paid a premium for bearing this risk.
58You are responsible for making arrangements for your company’s annual picnic. You have taken all the necessary actions and have reserved an outdoor park on a particular day. You have bought umbrellas and rented tents just in case you need them. Which of the following risk strategies are you using in this case?
SELECT THE CORRECT ANSWER
Passive acceptance
Contingency planning
Avoidance
Transference
Correct Option:B
EXPLANATION
The contingency plan includes specific action that will be taken if opportunities or threats occur.
61While overseeing a software engineering project, you find that one of the subcontractors failed to deliver on the last three projects. Upon further investigation, you learn that there are several complaints filed against this subcontractor and that they have a very bad reputation in the market. Realizing that is it too big a risk, you terminate the contract with the subcontractor and instead hire a couple of individuals to work on the components. Which risk response strategy did you use in this situation?
SELECT THE CORRECT ANSWER
Accept
Transfer
Mitigate
Avoid
Correct Option:D
EXPLANATION
Avoid is the elimination of the threat by eliminating the cause or changing the project management plan. Here, you utilized the avoid strategy by terminating the contract with the subcontractor to eliminate the threat to your project.
74One of your hardware vendors sends you an e-mail stating that due to severe bad weather, she will not be able to deliver the networking equipment on time. You respond to this risk by leasing the required equipment from a local company until yours arrives. Which of the following statements is TRUE?
SELECT THE CORRECT ANSWER
This is risk avoidance.
This is risk mitigation.
This is risk acceptance.
This is risk exploitation.
Correct Option:B
EXPLANATION
Risk mitigation simply means a reduction in the probability and/or impact of an adverse risk event to an acceptable threshold. Leasing the equipment reduces the consequence of the threat in this specific situation.
179While identifying risks in your project, your team cannot find an efficient way to reduce the impact and probability or to insure against one of the risks. The relevant work is integral to the project; thus, you cannot simply remove the work package. There is no suitable company to outsource the work to either. What is the best course of action in this situation?
SELECT THE CORRECT ANSWER
Identify ways to transfer the risk
Accept the risk and have contingency reserves
Identify ways to avoid the risk
Keep looking for ways to mitigate the probability and impact of the risk
Correct Option:A
EXPLANATION
Transferring risk may increase costs but will assist in moving the risk from the primary to another group or entity, lowering the overall risk exposure.
43John, the project manager of an oil exploration company, is assessing the risks of beginning offshore drilling activity. He finds that the activity is scheduled in the month of July. Generally, around the month of July, there are a lot of hurricanes or cyclones that are formed in the sea. He decides to reschedule these activities until mid-August. What kind of risk response is this?
SELECT THE CORRECT ANSWER
Escalate
Avoid
Transfer
Accept
Correct Option:B
EXPLANATION
The avoid strategy involves a change in the plan such that the risk is avoided to escape the impact.
53A construction company is executing a roadway project which involves the laying of state highway roads. The government has allotted another project to the same company for re-aligning some culverts along the highway. Although the construction company is not very experienced in erection of culverts, it has decided to use the opportunity to outsource the culvert construction to another company that specializes in the same. This is an example of what type of risk strategy?
SELECT THE CORRECT ANSWER
Accept
Share
Avoid
Mitigate
Correct Option:B
EXPLANATION
You share the opportunity with the other company.
154During project monitoring and controlling, you realize the project will miss a few deadlines as the skill set required is not accessible within the team. You considered training a few resources, but finances are not available in the project budget. You discussed it with the project sponsor, who decided to bring it to the attention of top management. Although you updated the risk register, you are not actively monitoring it. What risk response strategy is this?
SELECT THE CORRECT ANSWER
Sharing risk
Avoiding risk
Escalating risk
Mitigating risk
Correct Option:C
EXPLANATION
In escalation, the risk is from outside the project scope or beyond the project team’s authority. Once escalated, it is the responsibility of the upper management to take action or advice the project team. The Project Manager won’t be able to formally monitor this risk and will check the status with upper management periodically.
156A senior director came up with an opportunity during project execution about starting a new line of business. You did a SWOT and concluded that the opportunity is worth pursuing, but the company doesn’t have any experience in the new line of business. You decided to partner with another organization that is an expert in this line. This strategy is called ____________________.
SELECT THE CORRECT ANSWER
Accepting risk
Avoiding risk
Mitigating risk
Sharing risk
Correct Option:D
EXPLANATION
Your organization identified an opportunity (positive risk) and decided to share it with another organization by forming a partnership. Hence, this is an example of sharing a positive risk.
