Asset Management Asset Risk Management 2 — Questions and Answers
Question 1: What does 'criticality assessment' determine in asset risk management?
- Asset purchase price
- Relative importance of an asset to organizational operations or safety (Correct answer)
- Number of maintenance staff needed
- Depreciation rate selection
Correct answer: Relative importance of an asset to organizational operations or safety
Criticality assessment ranks assets by the consequence of their failure on operations, safety, environment, and financial performance.
Question 2: Which risk analysis method uses probability distributions and repeated random sampling to model a range of possible outcomes for asset performance?
- Sensitivity Analysis
- Monte Carlo Simulation (Correct answer)
- Decision Tree Analysis
- Failure Mode Analysis
Correct answer: Monte Carlo Simulation
Monte Carlo simulation runs thousands of scenarios with randomized inputs to produce a probability distribution of potential outcomes.
Question 3: ISO 55000 standard for asset management emphasizes that risk management decisions should be based on:
- Lowest upfront cost
- Optimal whole-life value considering risk, cost, and performance (Correct answer)
- Maximum replacement schedule
- Vendor recommendations only
Correct answer: Optimal whole-life value considering risk, cost, and performance
ISO 55000 requires asset management decisions to balance whole-life costs against risks and performance to maximize value.
Question 4: What is the purpose of a Business Impact Analysis (BIA) in asset risk management?
- Calculate annual depreciation
- Identify critical assets and quantify the impact of their disruption (Correct answer)
- Approve capital expenditure budgets
- Set employee performance targets
Correct answer: Identify critical assets and quantify the impact of their disruption
A BIA identifies which assets are essential to business continuity and estimates financial and operational impacts if those assets fail.
Question 5: Which metric expresses an asset's failure probability as the number of failures expected per unit of operating time?
- Mean Time to Repair (MTTR)
- Failure Rate (λ) (Correct answer)
- Overall Equipment Effectiveness (OEE)
- Availability Percentage
Correct answer: Failure Rate (λ)
Failure rate (lambda) quantifies how often an asset fails per hour or cycle, forming the basis of reliability calculations.
Question 6: In risk management, 'residual risk' is defined as:
- Risk before any controls are applied
- Risk remaining after risk treatment measures are implemented (Correct answer)
- Risk transferred to insurance
- Risk accepted without review
Correct answer: Risk remaining after risk treatment measures are implemented
Residual risk is what remains after controls, mitigations, and treatments have been applied to reduce the original inherent risk.
Asset Management Asset Risk Management 2
What does 'criticality assessment' determine in asset risk management?