Risk Management Flashcards
7 cards from real Financial Management for Project Managers practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Management flashcards as text
A project's cost estimate has a P80 value of $2.4M and a P50 value of $2.1M. A risk-averse sponsor prefers to fund the project at which level?
Answer: P80 ($2.4M)
Funding at P80 means there is an 80% probability that actual costs will not exceed that amount, providing a larger buffer for a risk-averse sponsor.
Which of the following is an example of a 'residual risk'?
Answer: The remaining exposure after a risk response has been implemented
Residual risk is the level of exposure that remains after a risk response has been applied.
A project manager notices that actual cost variance is consistently negative across multiple reporting periods. From a risk management perspective, this MOST likely indicates:
Answer: An unidentified risk has materialized and is affecting costs
Persistent negative cost variance (spending more than planned) often signals that an unplanned risk event is impacting the project.
When using a probability and impact matrix, a risk rated 'High' probability and 'High' impact would typically require which response approach?
Answer: Aggressive response planning (avoid, transfer, or mitigate)
High/High risks represent the greatest threat to project objectives and demand proactive, aggressive response strategies.
A project manager calculates that fixing a defect after delivery will cost $500,000 but preventing it during development costs $50,000. This analysis is BEST described as:
Answer: Cost-benefit analysis of risk response options
Comparing the cost of prevention versus the cost of failure is a cost-benefit analysis used to justify proactive risk responses.
A risk trigger (also called a 'risk symptom' or 'warning sign') is BEST used to:
Answer: Signal that a risk is about to occur, prompting execution of the response plan
Risk triggers are indicators that warn the team a risk event is imminent, enabling timely activation of the pre-planned response.
Under PMBOK guidance, contingency reserves are BEST described as budget set aside to address:
Answer: Known risks that have been identified and analyzed
Contingency reserves are specifically allocated for known risks identified in the risk register, while management reserves cover unknown risks.