MEM Risk Management 2

Question 1

In quantitative risk analysis, what is Monte Carlo simulation used for?

Accepted Answer

Running thousands of scenarios to model the probability distribution of project outcomes

Answer

Monte Carlo simulation uses repeated random sampling across input variable distributions to produce a probabilistic range of possible project outcomes (cost, schedule, etc.).

Question 2

What is the primary purpose of a 'risk breakdown structure' (RBS)?

Accepted Answer

To hierarchically organize risk sources to ensure comprehensive identification

Answer

The RBS organizes potential risk sources into a hierarchical structure (e.g., technical, external, organizational) to systematically identify risks and ensure none are overlooked.

Question 3

Which of the following best describes 'residual risk'?

Accepted Answer

The risk that remains after all mitigation actions have been implemented

Answer

Residual risk is the remaining level of exposure after planned risk response actions have been fully implemented, which may still require monitoring or acceptance.

Question 4

In enterprise risk management (ERM), what distinguishes it from traditional project risk management?

Accepted Answer

ERM takes a holistic, organization-wide view of risk across all functions and strategic objectives

Answer

ERM integrates risk management across all organizational levels and functions, aligning risk tolerance with strategic objectives rather than focusing on individual project risks.

Question 5

What is a 'contingency reserve' in project risk management?

Accepted Answer

Time or cost buffer allocated to cover identified risks that may occur

Answer

A contingency reserve is planned budget or schedule buffer allocated to address identified risks (known unknowns) that have a probability of occurring during the project.

MEM - Master of Engineering Management Practice Test

MEM - Master of Engineering Management Practice Test

MEM Risk Management 2