CRA Quantitative Risk Analysis 2

Question 1

In a Monte Carlo simulation for project risk, what does the 80th percentile of the cost distribution represent?

Accepted Answer

The cost value below which 80% of simulated outcomes fall

Answer

The 80th percentile means 80% of simulated outcomes produced a cost at or below that value, making it a confidence threshold.

Question 2

Which correlation measure is most appropriate when assessing the relationship between two non-normally distributed risk variables?

Accepted Answer

Spearman rank correlation

Answer

Spearman rank correlation is non-parametric and does not assume normality, making it suitable for non-normal distributions.

Question 3

A risk has a 5% annual probability of occurrence and a loss of $2 million. What is the annual expected loss (AEL)?

Accepted Answer

$100,000

Answer

AEL = probability × impact = 0.05 × $2,000,000 = $100,000.

Question 4

In quantitative risk analysis, what is the primary purpose of a tornado diagram?

Accepted Answer

To rank input variables by their sensitivity impact on the output

Answer

A tornado diagram ranks variables from most to least influential on the output metric, identifying which risks drive the most uncertainty.

Question 5

Which of the following best describes 'epistemic uncertainty' in quantitative risk analysis?

Accepted Answer

Uncertainty arising from lack of knowledge or data

Answer

Epistemic uncertainty stems from incomplete knowledge and can theoretically be reduced by gathering more information.

(CRA) Certified Risk Architect Practice Test