CPE Risk Management and Contingency Planning 3 — Questions and Answers
Question 1: A risk that has been identified but for which no active response plan is developed is said to be:
- Transferred
- Accepted passively (Correct answer)
- Mitigated
- Avoided
Correct answer: Accepted passively
Passive acceptance means acknowledging the risk exists but taking no preemptive action, relying on contingency reserves if it occurs.
Question 2: In risk analysis, 'residual risk' refers to:
- Risks that have already materialized
- The remaining risk exposure after response strategies have been applied (Correct answer)
- Risks transferred to subcontractors
- The total budget contingency
Correct answer: The remaining risk exposure after response strategies have been applied
Residual risk is the leftover exposure that remains after mitigation or other response measures have been implemented.
Question 3: Which AACE International recommended practice provides guidance on cost estimate classification and contingency ranges?
- RP 10S-90
- RP 18R-97 (Correct answer)
- RP 40R-08
- RP 66R-11
Correct answer: RP 18R-97
AACE RP 18R-97 establishes the cost estimate classification system linking estimate class to expected accuracy and contingency ranges.
Question 4: A project team decides to reduce scope to eliminate a high-probability, high-impact risk. This is an example of:
- Risk acceptance
- Risk transfer
- Risk avoidance (Correct answer)
- Risk mitigation
Correct answer: Risk avoidance
Risk avoidance involves changing the plan to eliminate the risk entirely, often by removing the risky scope element.
Question 5: What is 'secondary risk' in the context of project risk management?
- A risk ranked second in priority
- A new risk introduced by a risk response action (Correct answer)
- A risk that occurs after project completion
- A risk covered by a subcontractor
Correct answer: A new risk introduced by a risk response action
Secondary risks arise as a direct result of implementing a risk response and must themselves be planned for.
Question 6: In a risk probability-impact matrix, a risk rated 'High' probability and 'High' impact would typically require:
- Passive monitoring only
- Inclusion in lessons learned only
- Aggressive response planning and active monitoring (Correct answer)
- Immediate project cancellation
Correct answer: Aggressive response planning and active monitoring
High-probability, high-impact risks demand proactive response strategies and continuous close monitoring.
Question 7: Which of the following best describes 'known unknowns' in project estimating?
- Risks that are completely unforeseeable
- Identified risks whose outcomes are uncertain (Correct answer)
- Historical cost data from past projects
- Fixed price contract items
Correct answer: Identified risks whose outcomes are uncertain
Known unknowns are risks you have identified and acknowledged but whose specific outcomes or timing remain uncertain.
CPE Risk Management and Contingency Planning 3
A risk that has been identified but for which no active response plan is developed is said to be: