Financial Management for Project Managers Risk Management 5

Question 1

A project team uses a 'risk burndown chart' to track:

Accepted Answer

The reduction in overall risk exposure over the project lifecycle

Answer

A risk burndown chart visualizes how total risk exposure decreases as risks are resolved or mitigated throughout the project.

Question 2

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?

Accepted Answer

Option B, because it has a smaller negative EMV (less expected loss)

Answer

When comparing negative EMVs, the option closest to zero represents the least expected financial loss and is preferred.

Question 3

In financial risk management, 'risk appetite' is BEST defined as:

Accepted Answer

The amount of risk an organization is willing to accept in pursuit of its objectives

Answer

Risk appetite describes the level of risk an organization is willing to tolerate before taking action to reduce exposure.

Question 4

Which technique involves interviewing subject matter experts individually rather than in a group to gather unbiased risk identification input?

Accepted Answer

Delphi technique

Answer

The Delphi technique uses anonymous, iterative expert surveys to build consensus and avoid groupthink in risk identification.

Question 5

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?

Accepted Answer

CPI = 0.83; project is over budget, signaling elevated financial risk

Answer

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.

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Risk Management 5