Business Case Writing Risk Assessment and Mitigation 1 — Questions and Answers
Question 1: In a business case risk register, risks are typically evaluated based on:
- Color preference of the project manager
- Probability of occurrence and potential impact (Correct answer)
- The vendor's reputation only
- Project timeline length
Correct answer: Probability of occurrence and potential impact
A risk register scores each risk by multiplying (or rating) its probability and impact to prioritize mitigation efforts.
Question 2: Which risk response strategy involves shifting the financial impact of a risk to a third party?
- Avoidance
- Transfer (Correct answer)
- Acceptance
- Escalation
Correct answer: Transfer
Risk transfer moves the financial consequences of a risk to another party, such as through insurance or fixed-price contracts.
Question 3: A 'residual risk' in a business case is best described as:
- A risk that has already occurred
- The remaining risk after mitigation measures have been applied (Correct answer)
- A risk assigned to a vendor
- A risk outside the project scope
Correct answer: The remaining risk after mitigation measures have been applied
Residual risk is what remains after the planned risk response has been implemented and accepted by the organization.
Question 4: Which qualitative risk analysis tool plots risks on a grid by likelihood and impact?
- Pareto chart
- Probability-Impact Matrix (Correct answer)
- Gantt chart
- SWOT analysis
Correct answer: Probability-Impact Matrix
A Probability-Impact Matrix visually maps risks based on how likely they are and how severe their consequences would be.
Question 5: In US business cases for regulated industries, which risk category requires specific regulatory compliance documentation?
- Market risk
- Compliance risk (Correct answer)
- Operational risk
- Reputational risk
Correct answer: Compliance risk
Compliance risk involves the potential for legal penalties or sanctions due to failure to adhere to laws, regulations, or internal policies.
Question 6: A risk contingency budget in a business case is designed to:
- Fund marketing campaigns
- Provide financial reserves to address identified risks if they occur (Correct answer)
- Pay employee overtime
- Cover vendor profit margins
Correct answer: Provide financial reserves to address identified risks if they occur
A contingency budget is a reserve set aside specifically to manage the financial impact of risks that materialize during the project.
Business Case Writing Risk Assessment and Mitigation 1
In a business case risk register, risks are typically evaluated based on: