Project Risk Management Risk Management Planning 5 — Questions and Answers
Question 1: A project team identifies that their industry has significant regulatory risk. How should this influence the risk breakdown structure (RBS) in the risk management plan?
- Regulatory risk should be excluded since it is outside the team's control
- A regulatory risk category should be explicitly included in the RBS (Correct answer)
- The RBS should only include internal project risks
- Regulatory risks are addressed only in the procurement management plan
Correct answer: A regulatory risk category should be explicitly included in the RBS
The RBS should reflect the actual risk landscape of the project, including industry-specific categories like regulatory risk, to ensure comprehensive risk identification.
Question 2: What is the MAIN purpose of defining risk categories during Plan Risk Management?
- To assign a dollar value to each risk
- To provide a structured framework that ensures comprehensive risk identification (Correct answer)
- To eliminate risks before the project begins
- To replace the need for a risk breakdown structure
Correct answer: To provide a structured framework that ensures comprehensive risk identification
Risk categories provide a structured framework that helps the team think systematically across different types of risks, reducing the chance of missing important risk areas.
Question 3: Which statement about the risk management plan is CORRECT?
- It is a static document that cannot be updated after the planning phase
- It is a component of the project management plan and can be updated as needed (Correct answer)
- It contains the full list of identified risks and their owners
- It is only required on projects with budgets exceeding $500,000
Correct answer: It is a component of the project management plan and can be updated as needed
The risk management plan is a subsidiary plan within the overall project management plan and should be updated whenever the project context or risk environment changes significantly.
Question 4: A project manager is presenting the risk management approach to a skeptical executive who sees risk management as overhead. What is the STRONGEST argument for investing in proper risk management planning?
- It is required by PMI's Code of Ethics
- Early risk planning reduces the cost of addressing risks later when options are fewer and more expensive (Correct answer)
- It creates documentation that protects the project manager legally
- It satisfies audit requirements without adding project value
Correct answer: Early risk planning reduces the cost of addressing risks later when options are fewer and more expensive
Addressing risks early in the project is far less costly than responding to them during execution, when options are more limited and the cost of change is higher.
Question 5: During Plan Risk Management, the team decides that risks will be re-evaluated at each phase gate. This decision is captured under which section of the risk management plan?
- Risk categories
- Funding
- Timing (Correct answer)
- Reporting formats
Correct answer: Timing
The timing section documents when and how frequently risk management activities will be performed, including phase gate reviews.
Question 6: An organization's previous projects have suffered significant overruns due to unmanaged technical risks. How should lessons learned influence the current project's risk management plan?
- Lessons learned are not relevant to risk management planning
- Technical risk should be elevated as a key category with defined escalation thresholds (Correct answer)
- The team should avoid documenting technical risks to reduce stakeholder concern
- Past overruns mean quantitative analysis is not needed
Correct answer: Technical risk should be elevated as a key category with defined escalation thresholds
Lessons learned from previous projects are an organizational process asset that should directly shape risk categories, thresholds, and response planning in the current project.
Question 7: Which of the following BEST explains why risk management planning must occur early in the project lifecycle?
- Risks only exist during the early phases of a project
- Early planning ensures risk processes are in place before risks are identified and analyzed (Correct answer)
- Risk management planning is more cost-effective when performed after execution begins
- Stakeholders are more engaged at the start of a project
Correct answer: Early planning ensures risk processes are in place before risks are identified and analyzed
Risk management planning must precede risk identification and analysis processes so that the methodology, tools, and responsibilities are established before any risk work begins.
Project Risk Management Risk Management Planning 5
A project team identifies that their industry has significant regulatory risk.
How should this influence the risk breakdown structure (RBS) in the risk management plan?