Project Risk Management Risk Management Planning 3 — Questions and Answers
Question 1: A newly appointed project manager takes over a project that has no risk management plan. What should be the FIRST step?
- Begin identifying risks immediately
- Conduct Plan Risk Management to establish the approach before proceeding (Correct answer)
- Review the issue log for existing problems
- Update the project schedule to include risk activities
Correct answer: Conduct Plan Risk Management to establish the approach before proceeding
Plan Risk Management must be performed first because it defines HOW all other risk processes will be conducted on the project.
Question 2: Which of the following BEST describes 'risk appetite' as documented in the risk management plan?
- The maximum exposure an organization will accept before stopping a project
- The degree of uncertainty an organization is willing to accept in pursuit of its objectives (Correct answer)
- The financial reserve set aside for risk response
- The list of risks that have been accepted without a response plan
Correct answer: The degree of uncertainty an organization is willing to accept in pursuit of its objectives
Risk appetite is the general degree of uncertainty an entity is willing to accept, reflecting its strategic willingness to take on risk in pursuit of value.
Question 3: On a large infrastructure project, the risk management plan assigns risk ownership to functional managers for technical risks and to the finance team for cost risks. What principle does this reflect?
- Risk avoidance
- Clear roles and responsibilities for risk management (Correct answer)
- Risk transfer to third parties
- Passive acceptance of risks
Correct answer: Clear roles and responsibilities for risk management
Defining roles and responsibilities in the risk management plan ensures accountability by aligning risk ownership with the appropriate functional expertise.
Question 4: A risk management plan defines a probability-impact matrix with 'very low,' 'low,' 'medium,' 'high,' and 'very high' ratings. What is the PRIMARY purpose of this matrix?
- To replace qualitative risk analysis
- To provide a consistent framework for prioritizing risks (Correct answer)
- To calculate the expected monetary value of risks
- To identify root causes of risks
Correct answer: To provide a consistent framework for prioritizing risks
The probability-impact matrix established in the risk management plan provides a consistent, agreed-upon framework for assessing and prioritizing risks during qualitative analysis.
Question 5: Which organizational process asset MOST directly influences how risk thresholds are set during Plan Risk Management?
- Project schedule baseline
- Organizational risk attitudes and policies (Correct answer)
- Procurement documents
- Stakeholder engagement plan
Correct answer: Organizational risk attitudes and policies
The organization's documented risk attitudes, policies, and risk tolerances directly inform what thresholds are acceptable when planning the risk approach.
Question 6: A project team is deciding between using a simple risk log versus a comprehensive risk register with detailed fields. This decision is documented in which planning artifact?
- Scope management plan
- Risk management plan (Correct answer)
- Communications management plan
- Quality management plan
Correct answer: Risk management plan
The risk management plan defines the format, fields, and level of detail to be used in the risk register throughout the project.
Question 7: Risk management funding is BEST allocated during which process?
- Identify Risks
- Plan Risk Management (Correct answer)
- Control Risks
- Perform Quantitative Risk Analysis
Correct answer: Plan Risk Management
Plan Risk Management is where budget for risk management activities is established, including funds for contingency and management reserves.
Project Risk Management Risk Management Planning 3
A newly appointed project manager takes over a project that has no risk management plan.
What should be the FIRST step?