PMP Risk Management 3 — Questions and Answers
Question 1: Which of the following BEST describes a risk appetite?
- The level of risk exposure an organization is willing to accept (Correct answer)
- The maximum financial loss allowed on a project
- The probability threshold that triggers escalation
- The residual risk after mitigation is applied
Correct answer: The level of risk exposure an organization is willing to accept
Risk appetite refers to the degree of uncertainty an organization is willing to accept in pursuit of its objectives.
Question 2: A tornado diagram is used in which type of risk analysis?
- Qualitative risk analysis
- Monte Carlo simulation
- Sensitivity analysis (Correct answer)
- Decision tree analysis
Correct answer: Sensitivity analysis
Tornado diagrams are a key output of sensitivity analysis, displaying which risks have the greatest potential impact on project objectives.
Question 3: What is the purpose of a fallback plan in risk management?
- To replace the contingency plan if it proves ineffective (Correct answer)
- To document risks that cannot be mitigated
- To transfer risk to a third party
- To record residual risks after mitigation
Correct answer: To replace the contingency plan if it proves ineffective
A fallback plan is implemented if the primary contingency response fails, serving as a secondary layer of defense.
Question 4: A project manager is enhancing conditions that make a positive risk more likely to occur. This is an example of:
- Exploiting
- Sharing
- Enhancing (Correct answer)
- Accepting
Correct answer: Enhancing
Enhancing is a positive risk (opportunity) response strategy that increases the probability or impact of an opportunity.
Question 5: Which process in risk management involves determining which risks may affect the project and documenting their characteristics?
- Plan Risk Management
- Perform Qualitative Risk Analysis
- Identify Risks (Correct answer)
- Plan Risk Responses
Correct answer: Identify Risks
The Identify Risks process is focused on finding potential risk events and documenting them in the risk register.
Question 6: Management reserves differ from contingency reserves in that management reserves are:
- For known unknowns approved by the project manager
- For unknown unknowns and require executive approval to use (Correct answer)
- Allocated for specific identified risks
- Part of the cost baseline
Correct answer: For unknown unknowns and require executive approval to use
Management reserves address unknown unknowns and are held by senior management, requiring their approval before use by the project manager.
Question 7: A project manager wants to gather risk information from experts anonymously to avoid groupthink. Which technique should be used?
- Brainstorming
- Delphi technique (Correct answer)
- SWOT analysis
- Root cause analysis
Correct answer: Delphi technique
The Delphi technique uses anonymous rounds of expert questionnaires to gather consensus while preventing dominant personalities from influencing responses.
PMP Risk Management 3
Which of the following BEST describes a risk appetite?