Project Risk Management Risk Response Strategies 2

Question 1

A project team decides to purchase insurance to cover potential losses from a major equipment failure. Which risk response strategy does this represent?

Accepted Answer

Transfer

Answer

Purchasing insurance transfers the financial impact of a risk to a third party (the insurer).

Question 2

Which of the following is the BEST example of a risk avoidance strategy?

Accepted Answer

Eliminating a high-risk project phase from the scope

Answer

Avoidance eliminates the risk entirely, often by changing the project plan or removing the source of the risk.

Question 3

A risk response plan requires significant upfront investment but substantially reduces the probability of a critical risk. What should the project manager evaluate to justify this response?

Accepted Answer

Whether the cost of the response is less than the expected monetary value of the risk

Answer

A response is justified when its cost is less than the expected monetary value (probability × impact) of the risk it addresses.

Question 4

Passive acceptance of a risk means the project team will:

Accepted Answer

Take no action and deal with consequences if the risk occurs

Answer

Passive acceptance involves no proactive action; the team simply deals with the risk if and when it materializes.

Question 5

A software project team identifies that a critical dependency on a vendor could delay the project. They negotiate a contractual penalty clause for late delivery. This is an example of:

Accepted Answer

Transfer

Answer

Shifting the financial consequence of the vendor's delay to the vendor via a penalty clause is a risk transfer strategy.

Project Risk Management Practice Test

Project Risk Management Practice Test

Project Risk Management Risk Response Strategies 2