HP Risk Management & Mitigation 3

Question 1

What is the primary purpose of a Risk Register?

Accepted Answer

To document identified risks, their likelihood, impact, and response plans

Answer

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?

Accepted Answer

Probability × Impact (monetary)

Answer

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:

Accepted Answer

Risk mitigation

Answer

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?

Accepted Answer

Unsystematic (specific) risk

Answer

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?

Accepted Answer

Likelihood and impact

Answer

A standard risk matrix plots the probability (likelihood) of a risk occurring against the severity of its impact to determine priority.

(HP) Honors Program Practice Test