Managing Project Risks Flashcards

What does a risk threshold represent in project risk management?

Answer: The level of risk exposure acceptable to the organization

Risk thresholds define the level of risk exposure that the organization or stakeholders are willing to accept before action is required.

Which qualitative risk analysis tool ranks risks based on their probability and impact scores?

Answer: Probability and Impact Matrix

The Probability and Impact Matrix maps each risk's likelihood against its potential effect to assign a priority rating.

A project manager adds 15% to the project budget to cover unforeseen risks that have not been specifically identified. This is an example of:

Answer: Management reserve

Management reserve covers unknown-unknown risks and is held outside the cost baseline, controlled by management.

In quantitative risk analysis, which technique uses repeated random sampling to model the range of possible project outcomes?

Answer: Monte Carlo Simulation

Monte Carlo Simulation runs thousands of iterations with random variable inputs to produce a probability distribution of outcomes.

A secondary risk is BEST defined as:

Answer: A risk arising directly from implementation of a risk response

Secondary risks are new risks introduced as a direct result of implementing a risk response action.

Which risk response strategy is appropriate when the potential upside of an opportunity is too valuable to leave to chance?

Answer: Exploit

Exploit eliminates uncertainty by ensuring the opportunity definitely occurs, such as assigning the best resources to guarantee success.

A workaround in risk management refers to:

Answer: An unplanned response to an unanticipated risk event that has occurred

Workarounds are unplanned responses developed on the fly when an unidentified risk materializes during project execution.