HP Risk Management & Mitigation 3 — Questions and Answers
Question 1: What is the primary purpose of a Risk Register?
- To assign blame when risks occur
- To document identified risks, their likelihood, impact, and response plans (Correct answer)
- To eliminate all project risks
- To report risks only to senior management
Correct answer: To document identified risks, their likelihood, impact, and response plans
A Risk Register is a centralized document that records identified risks, their assessments, owners, and planned responses for ongoing management.
Question 2: Which formula is used to calculate Expected Monetary Value (EMV) of a risk?
- Probability × Cost of mitigation
- Probability × Impact (monetary) (Correct answer)
- Impact − Probability
- Likelihood + Severity
Correct answer: Probability × Impact (monetary)
EMV = Probability × Impact, providing a weighted dollar value that helps prioritize risks and allocate contingency budgets.
Question 3: A student researcher backs up data daily to prevent data loss. This is best classified as:
- Risk avoidance
- Risk transfer
- Risk mitigation (Correct answer)
- Risk acceptance
Correct answer: Risk mitigation
Regular backups reduce the impact of a data-loss risk without eliminating its possibility, making it a mitigation strategy.
Question 4: Which type of risk is unique to a specific project and does not affect the overall portfolio?
- Systematic risk
- Unsystematic (specific) risk (Correct answer)
- Market risk
- Residual risk
Correct answer: Unsystematic (specific) risk
Unsystematic or specific risk affects only a particular project or asset and can typically be reduced through diversification or targeted controls.
Question 5: When prioritizing risks, which two dimensions are most commonly plotted on a risk matrix?
- Cost and time
- Likelihood and impact (Correct answer)
- Stakeholders and budget
- Scope and quality
Correct answer: Likelihood and impact
A standard risk matrix plots the probability (likelihood) of a risk occurring against the severity of its impact to determine priority.
Question 6: A contingency plan differs from a fallback plan in that a contingency plan is:
- Used only after the fallback plan fails
- Activated when a specific risk trigger occurs (Correct answer)
- Created after the risk has already materialized
- Designed for risks with zero probability
Correct answer: Activated when a specific risk trigger occurs
A contingency plan is a pre-defined response activated by a specific risk trigger, while a fallback plan is used if the contingency plan itself fails.
Question 7: In an honors thesis project, a student identifies that a key subject pool may not be available during summer. The best immediate action is to:
- Cancel the study and choose a different topic
- Document the risk and develop an alternative data-collection timeline (Correct answer)
- Proceed without any changes and hope for the best
- Transfer responsibility to the faculty advisor immediately
Correct answer: Document the risk and develop an alternative data-collection timeline
Documenting the risk and creating an alternative plan ensures preparedness while keeping the project viable.
HP Risk Management & Mitigation 3
What is the primary purpose of a Risk Register?