Risk Management Flashcards

In a risk assessment, risk is commonly evaluated as a combination of which two factors?

Answer: Likelihood and impact

Risk is typically rated by how likely an event is and how severe its consequences would be.

A coach helping a leader prepare for a reorganization asks, "What could go wrong, and what would you do?" Which technique is this?

Answer: Contingency planning

Identifying potential problems and preplanned responses is contingency planning.

Which of the four classic risk responses means shifting the financial consequences of a risk to a third party, such as through insurance?

Answer: Transfer

Transferring risk moves its consequences to another party, like an insurer or contractor.

A leader decides to proceed with a project despite a low-impact risk, without taking action, because mitigation costs more than the potential loss. This is called:

Answer: Risk acceptance

Accepting a risk means acknowledging it and choosing not to act because the cost of response outweighs the benefit.

A coach notices a client consistently underestimating risks after early successes. Which bias is most likely at work?

Answer: Overconfidence bias

Overconfidence leads people to overrate their abilities and underestimate potential problems.

Which coaching question best helps a leader build a culture where team members surface risks early?

Answer: "How do you respond when someone raises a concern, and what does that teach your team?"

Leader reactions to concerns shape psychological safety, which determines whether risks are raised early.

What is the purpose of a pre-mortem exercise a coach might use with a leadership team?

Answer: To imagine a future failure and identify its likely causes before starting

A pre-mortem asks the team to assume failure and work backward to uncover hidden risks in advance.