PfMP Certification Portfolio Risk Management 2

Question 1

Which document formally authorizes a portfolio risk management approach and defines roles, responsibilities, and methodologies?

Accepted Answer

Risk Management Plan

Answer

The Risk Management Plan defines how portfolio risk management activities will be structured, including roles, responsibilities, timing, and methodologies.

Question 2

When a risk response creates a new risk, the newly created risk is known as a:

Accepted Answer

Secondary risk

Answer

A secondary risk is a risk that arises as a direct result of implementing a risk response, and it must be planned for just like primary risks.

Question 3

A portfolio manager uses a Risk Breakdown Structure (RBS). What is the main benefit of this tool?

Accepted Answer

It provides a hierarchical framework to categorize and organize portfolio risks

Answer

An RBS provides a hierarchical decomposition of risks by category, helping portfolio managers ensure comprehensive risk identification across all relevant areas.

Question 4

Which of the following best describes a 'risk threshold' in portfolio management?

Accepted Answer

The measure of acceptable variation in outcomes above which a risk response is required

Answer

A risk threshold is the level of risk exposure above which a risk response action is required, helping define when risks need active management.

Question 5

In portfolio risk management, 'risk aggregation' refers to:

Accepted Answer

Combining individual component risks to understand the overall portfolio-level risk exposure

Answer

Risk aggregation combines risks from individual portfolio components to provide a holistic view of the portfolio's overall risk exposure and its alignment with risk appetite.

PfMP Certification Practice Test

PfMP Certification Practice Test

PfMP Certification Portfolio Risk Management 2