CAPM Risk Management 3

Question 1

A risk with a 30% probability and a $50,000 impact has an expected monetary value (EMV) of:

Accepted Answer

$15,000

Answer

EMV is calculated by multiplying probability by impact: 0.30 × $50,000 = $15,000.

Question 2

Which of the following tools is used to visually display the cumulative probability distribution of project outcomes?

Accepted Answer

S-curve

Answer

An S-curve displays the cumulative probability that project cost or schedule will not exceed a given value.

Question 3

The amount of risk an organization is willing to accept in pursuit of an objective is known as:

Accepted Answer

Risk appetite

Answer

Risk appetite is the broad-level amount of risk an organization is willing to accept while pursuing its strategic objectives.

Question 4

A project team decides to add extra time to the schedule to account for identified risks. This reserve is called:

Accepted Answer

Contingency reserve

Answer

Contingency reserve is budget allocated for known risks (known unknowns) and is included within the cost baseline.

Question 5

Which diagramming technique shows the relationship between a risk and its causes and effects?

Accepted Answer

Influence diagram

Answer

Influence diagrams graphically represent cause-and-effect relationships among variables including risks and their impacts.

CAPM Practice Test