HP Risk Management & Mitigation 2 — Questions and Answers
Question 1: In a qualitative risk assessment matrix, which combination correctly describes a HIGH-priority risk?
- Low likelihood, high impact
- High likelihood, low impact
- High likelihood, high impact (Correct answer)
- Medium likelihood, medium impact
Correct answer: High likelihood, high impact
A high-priority risk has both high likelihood of occurrence and high potential impact on project objectives.
Question 2: Which risk response strategy involves shifting the negative consequences of a risk to a third party?
- Avoidance
- Transfer (Correct answer)
- Acceptance
- Mitigation
Correct answer: Transfer
Risk transfer moves the financial or operational burden of a risk to another party, such as through insurance or outsourcing.
Question 3: A project team decides to add buffer time to a schedule to handle potential delays. This is an example of which risk response?
- Risk avoidance
- Risk acceptance (active) (Correct answer)
- Risk transfer
- Risk exploitation
Correct answer: Risk acceptance (active)
Adding contingency reserves (time or budget) is active acceptance — acknowledging the risk and preparing a buffer rather than eliminating it.
Question 4: What is a 'residual risk' in risk management?
- A risk that has already occurred
- The risk remaining after mitigation strategies are applied (Correct answer)
- A risk transferred to a third party
- A risk identified after project completion
Correct answer: The risk remaining after mitigation strategies are applied
Residual risk is the level of risk that remains after controls and mitigation measures have been implemented.
Question 5: Which of the following best describes a 'risk trigger'?
- The financial cost of a risk event
- An indicator that a risk is about to occur (Correct answer)
- The person responsible for managing a risk
- The probability assigned to a risk
Correct answer: An indicator that a risk is about to occur
A risk trigger (or warning sign) is an event or condition that signals a risk is imminent or has occurred.
Question 6: A company chooses not to enter a new market because the regulatory risks are too high. Which strategy is being used?
- Risk mitigation
- Risk transfer
- Risk avoidance (Correct answer)
- Risk acceptance
Correct answer: Risk avoidance
Risk avoidance eliminates the threat by choosing not to engage in the activity that creates the risk.
Question 7: In the context of honors-level academic projects, which approach best demonstrates proactive risk management?
- Waiting until a problem occurs before addressing it
- Identifying potential obstacles during the planning phase and creating contingency plans (Correct answer)
- Delegating all risk decisions to the faculty advisor
- Ignoring low-probability risks entirely
Correct answer: Identifying potential obstacles during the planning phase and creating contingency plans
Proactive risk management involves anticipating risks during planning and developing contingency plans before issues arise.
HP Risk Management & Mitigation 2
In a qualitative risk assessment matrix, which combination correctly describes a HIGH-priority risk?