Exploit risk strategy
The project is currently behind schedule and with the goal of catching up, you decide to ensure that you reduce the time. Which of the following is an example of exploiting the risk?
A. Assign the most experienced and most talented personnel on any task.
B. Assign the most experienced and most talented personnel on a critical task.
C. Buy insurance against the delay.
D. Find a logical partner to share the risk with.
Answer: B. Assign the most experienced and most talented personnel on a critical task.
Exploiting a risk means that you are ensuring that the opportunity definitely happens. By adding the best person for a critical task, you are ensuring that the project work accelerates toward the goal.
Process for risk audits
Risk audits are often used in which process?
A. Plan Risk Responses
B. Identify Risks
C. Plan Risk Management
D. Monitor and Control Risks
Answer: D. Monitor and Control Risks
Risk audits is a tool and technique of the Monitor and Control Risks process.
Passive acceptance response strategy
You and your sponsor agree to passively accept the quality risk of using a non-certified engineer on the project. What will you be doing?
A. Nothing. You will only react if the risk event occurs.
B. Find a way to decrease the probability or impact of the risk.
C. Create a contingency plan in the event the risk event occurs.
D. Insure the risk so your company can be compensated if the risk event occurs.
Answer: A. Nothing. You will only react if the risk event occurs.
Passive acceptance means that you do not do anything unless the risk event occurs. If that is the case, then a workaround is created at that time. Typically this strategy is for risks that have a low probability and/or low impact. Decreasing probability or impact is a mitigation response while insurance is a transfer response.
Transfer risk response strategy
A good example of transferring a negative risk is:
A. Hiring another contractor to accelerate a project
B. Replacing a new employee with a more experienced one to ensure better quality
C. Buying insurance against weather impacting a construction schedule
D. Starting a task a few days earlier on the critical path
Answer: C. Buying insurance against weather impacting a construction schedule
When transferring as a risk response strategy, the risk is either completely or partially shifted to a third party. The risk is not actually removed entirely though, rather the responsibility has simply been reassigned. Insurance is a common method to transfer a risk.
Avoid risk strategy
A blizzard is scheduled to arrive at 8:00 AM next Monday, exactly when the department’s day-long conference is scheduled. Which of the following is an example of avoiding the risk?
A. Reschedule the meeting date to Tuesday.
B. Extending the meeting end time from 4:00 PM to 5:00 PM.
C. Switching the conference to a video teleconference.
D. Changing the start time from 8:00 AM to 9:00 AM.
Answer: C. Switching the conference to a video teleconference.
Risk avoidance must eliminate the threat entirely. Reduction of probability or impact would be mitigation. In this case, although a video teleconference may not be as effective, the risk was completely avoided if that is the intended goal.
Monte Carlo technique
Your client requests that you to use a Monte Carlo technique for the project. What are you being asked to do?
A. Create a histogram that ranks risks.
B. Estimate cost and time results by executing the project many times through a simulator.
C. Ignore minor risks and take our chances.
D. Monitor cost variances and use contingency funds when necessary.
Answer: B. Estimate cost and time results by executing the project many times through a simulator.
The Monte Carlo, a Quantitative Risk Analysis Technique, runs simulations to estimate cost and time. It uses many iterations to produce a probability distribution.
Expected monetary value for a project
Expected monetary value (EMV) for an entire project is calculated by:
A. Creating a probability and impact matrix
B. Performing a sensitivity analysis
C. Adding the EMV for each risks
D. EMV can only be determined for each risk, not for an entire project
Answer: C. Adding the EMV for each risks
The EMV for an entire project is just the sum of the EMVs of all the risks.
Expected monetary value for a risk
For a particular risk, if the probability is 10% and the impact is -$20,000, then the expected monetary value (EMV) is:
A. -$2,000
B. $2,000
C. $20,000
D. Not enough information to determine
Answer: A. -$2,000
The expected monetary value (EMV) for a risk is simply the probability times the impact.
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