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 team uses a 'risk burndown chart' to track:
Answer: The reduction in overall risk exposure over the project lifecycle
A risk burndown chart visualizes how total risk exposure decreases as risks are resolved or mitigated throughout the project.
A project manager is evaluating two options: Option A has an EMV of −$30,000 and Option B has an EMV of −$10,000. Which option should be selected based on EMV alone?
Answer: Option B, because it has a smaller negative EMV (less expected loss)
When comparing negative EMVs, the option closest to zero represents the least expected financial loss and is preferred.
In financial risk management, 'risk appetite' is BEST defined as:
Answer: The amount of risk an organization is willing to accept in pursuit of its objectives
Risk appetite describes the level of risk an organization is willing to tolerate before taking action to reduce exposure.
Which technique involves interviewing subject matter experts individually rather than in a group to gather unbiased risk identification input?
Answer: Delphi technique
The Delphi technique uses anonymous, iterative expert surveys to build consensus and avoid groupthink in risk identification.
A project is 60% complete with a BAC of $500,000, EV of $300,000, and AC of $360,000. What is the project's Cost Performance Index (CPI), and what does it imply for future financial risk?
Answer: CPI = 0.83; project is over budget, signaling elevated financial risk
CPI = EV ÷ AC = $300,000 ÷ $360,000 = 0.833, meaning $1.20 is spent for every $1.00 of work completed — indicating cost overrun risk.
A project manager decides to do nothing about a low-probability, low-impact risk but documents it in the risk register for monitoring. This strategy is called:
Answer: Passive acceptance
Passive acceptance means no proactive action is taken; the team simply monitors the risk and responds if it occurs.
When a project manager establishes a 'watch list,' it typically contains risks that:
Answer: Have low priority ratings and need periodic monitoring but no active response
A watch list captures low-priority risks that do not require immediate action but should be reassessed periodically as the project progresses.