Project Risk Management Risk Response Strategies 5 — Questions and Answers
Question 1: A project manager identifies that if a competitor releases a similar product early, it will invalidate the project's business case. The team decides to accelerate the project schedule to beat the competitor. This response strategy for an opportunity is:
- Exploit (Correct answer)
- Enhance
- Share
- Accept
Correct answer: Exploit
Exploiting an opportunity means taking deliberate action to ensure the positive event occurs, such as accelerating the schedule to capture the market first.
Question 2: Which of the following scenarios best illustrates 'enhance' as a risk response for an opportunity?
- Signing an agreement with a partner to co-develop a feature
- Adding more experienced staff to increase the chance of early delivery (Correct answer)
- Accepting the opportunity if it occurs without taking action
- Removing barriers so the opportunity is guaranteed to occur
Correct answer: Adding more experienced staff to increase the chance of early delivery
Enhance increases the probability or impact of an opportunity, such as assigning experienced staff to improve the likelihood of early delivery.
Question 3: A project manager includes $50,000 in contingency reserves in the project budget. This reserve is intended to address:
- Unknown unknowns identified through Monte Carlo simulation
- Known risks that have been identified and accepted (Correct answer)
- Risks identified through expert judgment only
- Management reserve for unforeseeable events
Correct answer: Known risks that have been identified and accepted
Contingency reserves are planned to address identified risks that have been accepted, while management reserves cover unknown unknowns.
Question 4: A risk response strategy results in the creation of a new risk. What must the project manager do?
- Ignore the new risk if it has a lower probability than the original
- Document and analyze the new secondary risk and plan appropriate responses (Correct answer)
- Escalate the new risk to the project sponsor immediately
- Cancel the original risk response strategy
Correct answer: Document and analyze the new secondary risk and plan appropriate responses
Secondary risks must be documented in the risk register and managed with their own response plans, just like any other identified risk.
Question 5: Which risk response strategy is appropriate when a threat is outside the project team's control and is best handled by a party with greater capability?
- Avoid
- Accept
- Transfer (Correct answer)
- Mitigate
Correct answer: Transfer
Transfer is used when another party is better positioned to manage the risk, shifting the responsibility and financial impact to them.
Question 6: The risk register is updated after risk response planning to include:
- Only the risks that have been transferred to third parties
- Agreed-upon responses, risk owners, and residual and secondary risks (Correct answer)
- A list of risks that have been closed
- Only the top 10 risks by priority score
Correct answer: Agreed-upon responses, risk owners, and residual and secondary risks
After response planning, the risk register is updated to reflect response strategies, responsible owners, residual risks, and any secondary risks introduced.
Question 7: A project sponsor requests that the team proceed with a risky phase without any mitigation because the potential reward is very high. This decision reflects:
- Risk averse behavior
- Risk tolerant or risk seeking behavior (Correct answer)
- Risk transfer to the sponsor
- A violation of risk management best practices
Correct answer: Risk tolerant or risk seeking behavior
Choosing to accept high risk for high reward reflects risk tolerance or risk-seeking behavior, which is a legitimate organizational choice.
Project Risk Management Risk Response Strategies 5
A project manager identifies that if a competitor releases a similar product early, it will invalidate the project's business case.
The team decides to accelerate the project schedule to beat the competitor.
This response strategy for an opportunity is: