Project Management Risk Management and Mitigation — Questions and Answers

Question 1: A project manager discovers a risk that was not captured in the initial risk register. What is the FIRST action to take?

Immediately escalate to the project sponsor
Document the risk in the risk register and assess it (Correct answer)
Implement a workaround to address it
Close the risk if it has not yet occurred

Correct answer: Document the risk in the risk register and assess it

Newly identified risks should be documented in the risk register and then assessed for probability and impact before any response is planned.

Question 2: Which risk response strategy is being used when a project team decides to outsource a high-risk component to a specialized vendor?

Avoid
Accept
Transfer (Correct answer)
Mitigate

Correct answer: Transfer

Transferring risk shifts the financial impact or responsibility of a risk to a third party, such as a vendor or insurer.

Question 3: What does the term 'risk appetite' refer to in project management?

The number of risks a project can have before it is cancelled
The amount of risk an organization is willing to accept in pursuit of its objectives (Correct answer)
The total monetary value of all identified risks
The frequency at which risk reviews are conducted

Correct answer: The amount of risk an organization is willing to accept in pursuit of its objectives

Risk appetite is the degree of uncertainty an organization or stakeholder is willing to accept in anticipation of a reward.

Question 4: During a risk review, a previously identified risk has its probability reduced from 'High' to 'Low' after a mitigation action was completed. What should the PM do?

Remove the risk from the register immediately
Update the risk register to reflect the new probability and impact scores (Correct answer)
Escalate the change to the change control board
Archive the risk and create a new entry

Correct answer: Update the risk register to reflect the new probability and impact scores

The risk register is a living document and should be updated whenever risk attributes change due to mitigation actions or new information.

Question 5: A project manager notices that the cost of mitigating a risk exceeds the expected monetary value (EMV) of the risk itself. What is the BEST course of action?

Implement the mitigation anyway to follow best practices
Accept the risk passively and plan a contingency response (Correct answer)
Transfer the risk to a third party at any cost
Avoid the risk by cancelling the associated work package

Correct answer: Accept the risk passively and plan a contingency response

When mitigation costs outweigh the EMV of the risk, passive acceptance with a contingency plan is the most cost-effective response.

Question 6: Which of the following BEST describes a secondary risk?

A risk that occurs after project closure
A risk that arises as a direct result of implementing a risk response (Correct answer)
A risk inherited from another project
A risk that has a secondary owner assigned

Correct answer: A risk that arises as a direct result of implementing a risk response

Secondary risks are new risks that emerge as a consequence of a planned risk response action.

Question 7: In qualitative risk analysis, a 'probability and impact matrix' is used to:

Calculate the exact financial exposure of each risk
Prioritize risks for further analysis or risk response planning (Correct answer)
Assign risk owners to each identified risk
Determine which risks require insurance coverage

Correct answer: Prioritize risks for further analysis or risk response planning

The probability and impact matrix helps teams prioritize risks by rating their likelihood and potential effect, guiding where to focus risk management efforts.

Question 8: A project sponsor asks for a single number that summarizes the overall risk exposure of the project. Which technique BEST provides this?

Qualitative risk analysis
Expected Monetary Value (EMV) analysis (Correct answer)
SWOT analysis
Risk categorization

Correct answer: Expected Monetary Value (EMV) analysis

EMV multiplies the probability of each risk by its monetary impact and sums them up to produce an overall risk exposure figure.

Question 9: Which of the following is an example of an 'opportunity' in the context of project risk management?

A vendor delivering materials two weeks early, freeing up schedule buffer (Correct answer)
A critical team member leaving the project
An unexpected regulatory requirement being added
A software tool failing during testing

Correct answer: A vendor delivering materials two weeks early, freeing up schedule buffer

In risk management, opportunities are uncertain events with positive impacts on project objectives, such as early delivery that adds schedule float.

Question 10: What is the purpose of a 'risk register' in project management?

To formally authorize the project and assign the project manager
To document identified risks, their characteristics, and planned responses (Correct answer)
To track project issues that have already occurred
To record stakeholder complaints about project risks

Correct answer: To document identified risks, their characteristics, and planned responses

The risk register is a central document that captures all identified risks, their probability, impact, owners, and planned response strategies.

Question 11: During Monte Carlo simulation for schedule risk analysis, what is the PRIMARY output?

A list of the top ten risks by probability
A probability distribution of possible project completion dates (Correct answer)
A precise single completion date with no variance
An updated project baseline schedule

Correct answer: A probability distribution of possible project completion dates

Monte Carlo simulation runs thousands of schedule scenarios to produce a probability distribution showing the likelihood of finishing by various dates.

Question 12: A project is facing a risk that the project team cannot control or mitigate. What is the MOST appropriate response strategy?

Transfer
Avoid
Accept
Escalate (Correct answer)

Correct answer: Escalate

Escalation is used when a risk is outside the project manager's authority or control and must be handled at a higher organizational level.

Question 13: Which document establishes the thresholds and processes for managing risk on a project?

Risk register
Risk management plan (Correct answer)
Issue log
Stakeholder engagement plan

Correct answer: Risk management plan

The risk management plan defines how risk management activities will be structured, including roles, methodologies, risk categories, and thresholds.

Question 14: A construction project is delayed because flooding damaged the site—an event that was identified but accepted. What is the PM's FIRST step now that the risk has occurred?

Update the probability in the risk register to 100%
Execute the planned contingency response (Correct answer)
Perform a new qualitative risk analysis
File an insurance claim before taking any project action

Correct answer: Execute the planned contingency response

When an accepted risk event occurs, the project manager should immediately execute the pre-planned contingency response to minimize impact.

Question 15: Which of the following is a key difference between a 'risk' and an 'issue' in project management?

A risk has already occurred; an issue has not yet happened
An issue has already occurred; a risk is an uncertain future event (Correct answer)
A risk always has a negative impact; an issue can be positive
An issue is tracked in the risk register; a risk is tracked in the issue log

Correct answer: An issue has already occurred; a risk is an uncertain future event

A risk is an uncertain future event that may affect project objectives, while an issue is a problem or situation that has already occurred.

Question 16: What type of risk analysis uses techniques such as decision tree analysis and sensitivity analysis?

Qualitative risk analysis
Quantitative risk analysis (Correct answer)
Residual risk analysis
Root cause analysis

Correct answer: Quantitative risk analysis

Quantitative risk analysis uses numerical techniques like decision trees and sensitivity analysis to estimate the effect of risks on project objectives.

Question 17: A project manager learns that a competitor plans to release a similar product two months before her project's launch. From a risk management perspective, this is BEST classified as:

An internal risk
An external risk (Correct answer)
A technical risk
A residual risk

Correct answer: An external risk

External risks originate outside the project and organization, such as market competition, regulatory changes, or economic shifts.

Question 18: When using the 'exploit' strategy in risk response planning, the project manager is:

Transferring a negative risk to a third party
Taking action to ensure a positive risk opportunity definitely occurs (Correct answer)
Accepting a threat and monitoring it passively
Reducing the likelihood of a negative risk event

Correct answer: Taking action to ensure a positive risk opportunity definitely occurs

Exploit is a response strategy for opportunities that seeks to eliminate uncertainty by making sure the positive event actually happens.

Question 19: A project manager sets aside $50,000 to handle identified risks and $20,000 for unknown risks. What are these reserves called, respectively?

Management reserve and contingency reserve
Contingency reserve and management reserve (Correct answer)
Risk budget and contingency fund
Operational reserve and risk allowance

Correct answer: Contingency reserve and management reserve

Contingency reserves address identified known-unknown risks, while management reserves are for unknown-unknown risks that were not anticipated.

Question 20: Which risk identification technique involves gathering a group of subject matter experts to brainstorm risks without judgment or criticism?

Delphi technique
Brainstorming (Correct answer)
Nominal group technique
Affinity diagrams

Correct answer: Brainstorming

Brainstorming brings together SMEs to freely generate risk ideas in an open, non-judgmental environment to maximize the number of risks identified.

Question 21: A tornado watch is issued for the area where a project's outdoor event is being held. The project team has no contingency plan for this scenario. What type of planning failure does this represent?

Failure to perform quantitative risk analysis
Failure to identify and plan for a foreseeable risk (Correct answer)
Failure to create a risk management plan
Failure to execute the risk response plan

Correct answer: Failure to identify and plan for a foreseeable risk

A tornado watch in a weather-prone region is a foreseeable risk that should have been identified and addressed with a contingency plan during risk planning.

Project Management Risk Management and Mitigation

A project manager discovers a risk that was not captured in the initial risk register.
What is the FIRST action to take?

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