CPM CPM Risk Management & Contingency Planning 1 — Questions and Answers
Question 1: Which risk response strategy involves shifting the negative impact of a risk to a third party?
- Avoid
- Mitigate
- Transfer (Correct answer)
- Accept
Correct answer: Transfer
Transferring risk shifts the financial or operational impact to a third party, such as through insurance or outsourcing.
Question 2: In the CPM framework, what is a contingency reserve primarily used for?
- Funding scope additions
- Covering identified risks that may occur (Correct answer)
- Paying bonuses to project team members
- Offsetting management overhead costs
Correct answer: Covering identified risks that may occur
Contingency reserves are budget set aside to address identified risks included in the risk register that may materialize during the project.
Question 3: A project manager is evaluating risks by multiplying probability by impact. Which technique is being used?
- Monte Carlo simulation
- Risk probability and impact matrix
- Expected monetary value (EMV) (Correct answer)
- Delphi technique
Correct answer: Expected monetary value (EMV)
Expected Monetary Value (EMV) is calculated by multiplying the probability of a risk event by its monetary impact to quantify risk exposure.
Question 4: Which of the following best describes a residual risk?
- A risk that has been fully eliminated
- A risk that remains after risk responses have been applied (Correct answer)
- A newly identified risk late in the project
- A risk transferred to an external vendor
Correct answer: A risk that remains after risk responses have been applied
Residual risks are those that remain after planned risk responses have been implemented and are typically accepted and monitored.
Question 5: During risk identification, which tool involves team members independently generating ideas before sharing them with the group?
- Brainstorming
- Nominal Group Technique (Correct answer)
- Delphi Technique
- SWOT Analysis
Correct answer: Nominal Group Technique
The Nominal Group Technique has participants generate ideas independently first, then share and prioritize them as a group to reduce groupthink bias.
Question 6: What is the primary purpose of a risk register in project management?
- To track project milestones
- To document identified risks, responses, and owners (Correct answer)
- To record team member performance issues
- To outline the project communication plan
Correct answer: To document identified risks, responses, and owners
A risk register is a project document that records all identified risks, their analysis, planned responses, and the individuals responsible for managing each risk.
CPM CPM Risk Management & Contingency Planning 1
Which risk response strategy involves shifting the negative impact of a risk to a third party?