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222 Project Execution – PMP Question Bank Free On Project Risk Management

04/02/2015 Marie Hall 0 Comment

222 Project Execution – PMP Question Bank Free On Project Risk Management

222 project execution – PMP question bank free on project risk management is specific to leading edge knowledge areas of project risk management and related processes. More particularly, those free PMP exam sample questions dig into objectives of project risk management, characteristics of risk, risk conditions, known risks, specific unknown risks, risk tolerance, risk responses, project risk management processes, to name a few. As a result of its comprehensive and pertinent coverage, you can elevate comprehension of project execution phase, master part of the content in this performance domain, develop critical thinking and skill up test taking. Notably, those numerous questions are equally divided into two pages and followed with instant answers and score after you hit submit. Then you can expect a stress-free and effective online practice. Don’t miss to try it yourself!

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222 Project Execution - PMP Question Bank Free On Project Risk Management - Page 1

• The strategy or mix of strategies most likely to be effective should be selected for each risk. • Risk analysis tools, such as decision tree analysis can be used to choose the most appropriate responses. • Specific actions are developed to implement that strategy, including primary and backup strategies, as necessary. • A fallback plan can be developed for implementation if the selected strategy turns out not to be fully effective or if an accepted risk occurs. • Secondary risks (risks driven by the strategies) should also be reviewed. • A contingency reserve is often allocated for time or cost. • If developed, it may include identification of the conditions that trigger its use
• Transferring liability for risk is most effective in dealing with financial risk exposure. • Risk transference nearly always involves payment of a risk premium to the party taking on the risk. • Transference tools can be quite diverse and include, but are not limited to, the use of insurance, performance bonds, warranties, guarantees, etc. • Contracts may be used to transfer liability for specified risks to another party.• In many cases, use of a cost-plus contract may transfer the cost risk to the buyer, while a fixed-price contract may transfer risk to the seller
forming risk-sharing partnerships, teams, special-purpose companies, or joint ventures, which can be established with the express purpose of taking advantage of the opportunity so that all parties gain from their actions
Risk categorization can reveal common root causes of risk or project areas requiring particular attention. Discovering concentrations of risk may improve the effectiveness of risk responses
Because of new work (or omitted work) generated by the risk responses, the cost performance baseline may be updated to reflect those changes
• Decisions to transfer risk, such as agreements for insurance, services, and other items as appropriate are selected in this process. • This may happen as a result of mitigating or transferring part or all of the threat or enhancing or sharing part or all of the opportunity. • The contract type selected also provides a mechanism for sharing the risks. • These decisions are inputs to the Plan Procurements process
Defines when and how often the risk management process will be performed throughout the project life cycle, establishes protocols for application of schedule contingency reserves, and establishes risk management activities to be included in the project schedule
1. Risk Register2. Cost Management Plan3. Schedule Management Plan4. Organizational Process Assets
The risk identification process also requires an understanding of the schedule management plan found in the project management plan. The project-specific approach to schedule management may generate or alleviate risk by its nature or structure
• Risks to the project can be categorized by sources of risk (e.g., using the RBS), the area of the project affected (e.g., using the WBS), or other useful category (e.g., project phase) to determine areas of the project most exposed to the effects of uncertainty. • Grouping risks by common root causes can lead to developing effective risk responses
These are also known as Ishikawa or fishbone diagrams, and are useful for identifying causes of risks
• Methodology• Roles and responsibilities• Budgeting• Timing• Risk categories• Definitions of risk probabilities and impact• Probability and impact matrix• Revised stakeholders' tolerances• Reporting formats• Tracking
The quality and credibility of the Perform Qualitative Risk Analysis process requires that different levels of the risks' probabilities and impacts be defined. General definitions of probability levels and impact levels are tailored to the individual project during the Plan Risk Management process for use in the Perform Qualitative Risk Analysis process
1. Risk Management Plan
Defines how risk budgets, contingencies, and management reserves will be reported and accessed
• extending the schedule, • changing the strategy, or • reducing scopeThe most radical avoidance strategy is to shut down the project entirely
This strategy is adopted because it is seldom possible to eliminate all threats from a project.
The risk identification process also requires an understanding of the quality management plan found in the project management plan. The project-specific approach to quality management may generate or alleviate risk by its nature or structure.
1. Risk Management Plan2. Activity Cost Estimates3. Activity Duration Estimates4. Scope Baseline5. Stakeholder Register6. Cost Management Plan7. Schedule Management Plan8. Quality Management Plan9. Project Documents10. Enterprise Environmental Factors11. Organizational Process Assets
Examines the project from each of the SWOT (strengths, weaknesses, opportunities, and threats) perspectives to increase the breadth of identified risks by including internally generated risks
Expected monetary value
• The goal of brainstorming is to obtain a comprehensive list of project risks.• The project team usually performs brainstorming, often with a multidisciplinary set of experts who are not part of the team. • Ideas about project risk are generated under the leadership of a facilitator, either in a traditional free-form brainstorm session with ideas contributed by participants, or structured using mass interviewing techniques such as the nominal group technique. • Categories of risk, such as a risk breakdown structure, can be used as a framework.• Risks are then identified and categorized by type of risk and their definitions are sharpened
• It requires definition of objective quantifiable measures of technical performance which can be used to compare actual results against targets. • Such technical performance measures might include weight, transaction times, number of delivered defects, storage capacity, etc. • Deviation, such as demonstrating more or less functionality than planned at a milestone, can help to forecast the degree of success in achieving the project's scope, and it may expose the degree of technical risk faced by the project
is a graphic display of cumulative costs, labor hours, percentage of work, or other quantities, plotted against time. The name derives from the S-like shape of the curve
Planning Process Group
• Interviewing• Probability Distributions
• Project risk management should be an agenda item at periodic status meetings. • The amount of time required for that item will vary, depending upon the risks that have been identified, their priority, and difficulty of response. • Risk management becomes easier the more often it is practiced. • Frequent discussions about risk makes it more likely that people will identify risks and opportunities
• The project manager is responsible for ensuring that risk audits are performed at an appropriate frequency, as defined in the project's risk management plan.• Risk audits may be included during routine project review meetings, or separate risk audit meetings may be held. • The format for the audit and its objectives should be clearly defined before the audit is conducted
With the risks facing the project, the probability of achieving project objectives under the current plan can be estimated using quantitative risk analysis results
• Potential responses to a risk may sometimes be identified during the Identify Risks process. • These responses, if identified in this process, may be useful as inputs to the Plan Risk Responses process
• Risks requiring near-term responses may be considered more urgent to address. • Indicators of priority can include time to affect a risk response, symptoms and warning signs, and the risk rating. • In some qualitative analyses the assessment of risk urgency can be combined with the risk ranking determined from the probability and impact matrix to give a final risk severity rating
an uncertain event or condition that, if it occurs, has an effect on at least one project objective. Objectives can include scope, schedule, cost, and quality
is updated to reflect changes in process and practice driven by the risk responses. This may include changes in tolerance or behavior related to resource loading and leveling, as well as updates to the schedule itself
aspects of the project's or organization's environment that may contribute to project risk, such as • immature project management practices, • lack of integrated management systems, • concurrent multiple projects, or • dependency on external participants who cannot be controlled
• As new information becomes available through the application of risk responses, assumptions will inherently change. • The assumptions log must be revisited to accommodate this new information. • Assumptions may be incorporated in the scope statement or in a separate assumptions log
• Sets the format and establishes criteria for planning, structuring, estimating, budgeting, and controlling project costs • Those controls may help determine the structure and/or application approach for quantitative analysis of the budget or cost plan
Helps to determine which risks have the most potential impact on the project. It examines the extent to which the uncertainty of each project element affects the objective being examined when all other uncertain elements are held at their baseline values
• Is required to assess the probability and impact of each risk to determine its location in the matrix • Securing expert judgment is often accomplished with the use of risk facilitation workshops or interviews. • The experts' bias should be taken into account in this process
• identification of new risk events, • updates to probability, impact, priority, response plans, ownership, and other elements of the risk register. • closing risks that are no longer applicable and releasing their associated reserves
1. Risk Probability and Impact Assessment2. Probability and Impact Matrix3. Risk Data Quality Assessment4. Risk Categorization5. Risk Urgency6. Expert Judgement
Because of new work (or omitted work) generated by the risk responses, the schedule baseline may be updated to reflect those changes.
• Risk attitudes and tolerances that describe the degree of risk that an organization will withstand
Risk mitigation implies a reduction in the probability and/or impact of an adverse risk event to be within acceptable threshold limits
• Deliverable status,• Schedule progress, and• Costs incurred
• Project files, including actual data,• Organizational and project process controls,• Risk statement templates, and• Lessons learned
• Taking early action to reduce the probability and/or impact of a risk occurring on the project is often more effective than trying to repair the damage after the risk has occurred. • Adopting less complex processes, conducting more tests, or choosing a more stable supplier are examples of mitigation actions. • Mitigation may require prototype development to reduce the risk of scaling up from a bench-scale model of a process or product. • Where it is not possible to reduce probability, a mitigation response might address the risk impact by targeting linkages that determine the severity
• The identified risks are described in as much detail as is reasonable. • A simple structure for risks in the list may be applied, such as EVENT may occur, causing IMPACT, or If CAUSE, EVENT may occur, leading to EFFECT. • In addition to the list of identified risks, the root causes of those risks may become more evident. These are the fundamental conditions or events that may give rise to one or more identified risks. They should be recorded and used to support future risk identification for this and other projects.
• This list of risks includes those that pose the greatest threat or present the greatest opportunity to the project• These include the risks that may have the greatest effect on cost contingency and those that are most likely to influence the critical path. • These risks may be identified, in some cases, through a tornado diagram generated as a result of the simulation analyses
The process of developing options and actions to enhance opportunities and to reduce threats to project objectives
• Indications that a risk has occurred or is about to occur. • Triggers may be discovered in the risk identification process and watched in the risk monitoring and control process. • Triggers are sometimes called risk symptoms or warning signs
May be updated to reflect changes in strategy, such as alterations in the make-or-buy decision or contract type(s) driven by the risk responses
Contains the risk management plan, which includes risk tolerances, protocols and the assignment of people (including the risk owners), time, and other resources to project risk management
1. Documentation Reviews2. Information Gathering Techniques3. Checklist Analysis4. Assumptions Analysis5. Diagramming Techniques6. SWOT Analysis7. Expert Judgement
These are graphical representations of situations showing causal influences, time ordering of events, and other relationships among variables and outcomes
A response to a negative risk that has occurred. Distinguished from contingency plan in that a workaround is not planned in advance of the occurrence of the risk event
1. Strategies for Negative Risks or Threats2. Strategies for Postive Risks or Opportunities3. Contingent Response Strategies4. Expert Judgement
• It follows the Perform Qualitative Risk Analysis process and the Perform Quantitative Risk Analysis process (if used). • It includes the identification and assignment of one person (the "risk response owner") to take responsibility for each agreed-to and funded risk response. • Addresses the risks by their priority, inserting resources and activities into the budget, schedule and project management plan as needed.• Selecting the best risk response from several options is often required.• The Plan Risk Responses section presents commonly used approaches to planning responses to the risks.
Root cause analysis is a specific technique to identify a problem, discover the underlying causes that lead to it, and develop preventive action
• Relative ranking or priority list of project risks• Risks grouped by categories• Causes of risk or project areas requiring particular attention• List of risks requiring response in the near-term• List of risks for additional analysis and response• Watchlists of low-priority risks• Trends in qualitative risk analysis results
• Continuous probability distributions • Discrete probability distributions• Uniform probability distributions
• Cause and Effect Diagrams• System or Process Flow Diagrams• Influence Diagrams
A statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen (i.e., analysis under uncertainty)
Planning Process Group
Risks are prioritized according to their potential implications for having an effect on the project's objectives. A typical approach to prioritizing risks is to use a look-up table or a Probability and Impact MatrixThe specific combinations of probability and impact that lead to a risk being rated as "high," "moderate," or "low" importance, with the corresponding importance for planning responses to the risk are usually set by the organization
The process of determining which risks may affect the project and documenting their characteristics
1. Risk Register2. Project Management Plan3. Work Performance Information4. Performance Reports
Information about the stakeholders will be useful in soliciting inputs for identifying risks as this will ensure that key stakeholders, especially the customer, are interviewed or otherwise participate during the "Identify Risks" process
1. Risk Register
Risk transfer requires shifting some or all of the negative impact of a threat, along with ownership of the response, to a third party. Transferring the risk simply gives another party responsibility for its management—it does not eliminate it
• Risks can be identified directly by experts with relevant experience of similar projects or business areas. • Such experts should be identified by the project manager and invited to consider all aspects of the project and suggest possible risks based on their previous experience and areas of expertise. • The experts' bias should be taken into account in this process
Organizations and stakeholders are willing to accept varying degrees of risk. Risks that are threats to the project may be accepted if the risks are within tolerances and are in balance with the rewards that may be gained by taking the risks
• Project risk is always in the future• A risk may have one or more causes and, if it occurs, it may have one or more impacts. A cause may be a requirement, assumption, constraint, or condition that creates the possibility of negative or positive outcomes. • Project risk has its origins in the uncertainty present in all projects• Organizations perceive risk as the effect of uncertainty on their project and organizational objectives• Individuals and groups adopt attitudes toward risk that influence the way they respond. These risk attitudes are driven by perception, tolerances, and other biases, which should be made explicit wherever possible• A consistent approach to risk should be developed for each project, and communication about risk and its handling should be open and honest• A conscious choice must be made at all levels of the organization to actively identify and pursue effective risk management during the life of the project. • Risk exists the moment a project is conceived. Moving forward on a project
Because of new work (or omitted work) generated by the risk responses, the WBS may be updated to reflect those changes
The risk identification process requires an understanding of the cost management plans found in the project management plan. The project-specific approach to cost management may generate or alleviate risk by its nature or structure
Stakeholders' tolerances, as they apply to the specific project, may be revised in the Plan Risk Management process
1. Risk Register2. Risk Management Plan
Describes how risk management will be structured and performed on the project. It becomes a subset of the project management plan
• Many control processes employ variance analysis to compare the planned results to the actual results. • For the purposes of monitoring and controlling risk events, trends in the project's execution should be reviewed using performance information. • Earned value analysis and other methods of project variance and trend analysis may be used for monitoring overall project performance.• Outcomes from these analyses may forecast potential deviation of the project at completion from cost and schedule targets. • Deviation from the baseline plan may indicate the potential impact of threats or opportunities
cannot be managed proactively, which suggests that the project team should create a contingency plan
• Is performed on risks that have been prioritized by the Perform Qualitative Risk Analysis process as potentially and substantially impacting the project's competing demands. • The Perform Quantitative Risk Analysis process analyzes the effect of those risk events. • It may be used to assign a numerical rating to those risks individually or to evaluate the aggregate effect of all risks affecting the project. • It also presents a quantitative approach to making decisions in the presence of uncertainty.• Generally follows the Perform Qualitative Risk Analysis process. In some cases, Perform Quantitative Risk Analysis may not be required to develop effective risk responses. • Availability of time and budget, and the need for qualitative or quantitative statements about risk and impacts, will determine which method(s) to use on any particular project. • Should be repeated after Plan Risk Responses, as well as part of Monitor and Control Risks, to determine if the overall project risk has been satisfactorily decr
reflect an organization's perceived balance between risk taking and risk avoidance
• Project assumptions are still valid,• Analysis shows an assessed risk has changed or can be retired,• Risk management policies and procedures are being followed, • Contingency reserves of cost or schedule should be modified in alignment with the current risk assessment.
• Information on prior, similar completed projects,• Studies of similar projects by risk specialists, and• Risk databases that may be available from industry or proprietary sources
Include contingency plans and workarounds. The latter are responses that were not initially planned, but are required to deal with emerging risks that were previously unidentified or accepted passively
The six Project Risk Management processes produce information that can be used for future projects, and should be captured in the organizational process assets. • Templates for the risk management plan, including the probability and impact matrix, and risk register;• Risk breakdown structure; and• Lessons learned from the project risk management activities.• These documents should be updated as needed and at project closure. • Final versions of the risk register and the risk management plan templates, checklists, and risk breakdown structure are included
• Key elements of the risk management plan for Perform Qualitative Risk Analysis include roles and responsibilities for conducting risk management, budgets, schedule activities for risk management, risk categories, definitions of probability and impact, the probability and impact matrix, and revised stakeholders' risk tolerances. • These inputs are usually tailored to the project during the Plan Risk Management process • If they are not available they can be developed during the process
• Required to identify potential cost and schedule impacts, to evaluate probability, and to define inputs (such as probability distributions) into the tools.• Comes into play in the interpretation of the data. Experts should be able to identify the weaknesses of the tools as well as their relative strengths. • Experts may determine when a specific tool may or may not be more appropriate given the organization's capabilities and culture
• List of identified risks• List of potential responses• Secondary risks• Residual risks
• to ensure that the degree, type, and visibility of risk management are commensurate with both the risks and the importance of the project to the organization. • to provide sufficient resources and time for risk management activities, and to establish an agreed-upon basis for evaluating risks
11.1 Plan Risk Management11.2 Identify Risks11.3 Perform Qualitative Risk Analysis11.4 Perform Quantitative Risk Analysis11.5 Plan Risk Responses11.6 Monitor and Control Risks
Discovering concentrations of risk may improve the effectiveness of risk responses
Iterative simulations are typically performed using the Monte Carlo technique. A simulation that produces distributions of possible outcome values
• Avoid• Transfer• Mitigate• Accept
• clarifying requirements, • obtaining information, • improving communication, or • acquiring expertise
Compares technical accomplishments during project execution to the project management plan's schedule of technical achievement
• Implementing contingency plans or workarounds sometimes results in a change request. • Are prepared and submitted to the Perform Integrated Change Control process • Can include recommended corrective and preventive actions as well
Provides a clear sense of the range of possibilities associated with the project and its deliverables and establishes the framework for how significant the risk management effort may ultimately become
• Information on prior, similar completed projects,• Studies of similar projects by risk specialists, and• Risk databases that may be available from industry or proprietary sources
• Estimates are made of potential project schedule and cost outcomes listing the possible completion dates and costs with their associated confidence levels• This output, often expressed as a cumulative distribution, can be used with stakeholder risk tolerances to permit quantification of the cost and time contingency reserves. • Such contingency reserves are needed to bring the risk of overrunning stated project objectives to a level acceptable to the organization
• Throughout execution of the project some risks may occur, with positive or negative impacts on budget or schedule contingency reserves. • Reserve analysis compares the amount of the contingency reserves remaining to the amount of risk remaining at any time in the project in order to determine if the remaining reserve is adequate
• Risks that have a negative impact on objectives if they occur(threats), and that are in the high-risk(dark gray) zone of the matrix, may require priority action and aggressive response strategies. • Threats in the low-risk (medium gray) zone may not require proactive management action beyond being placed on a watchlist or adding a contingency reserve.• Opportunities in the high-risk (dark gray) zone that can be obtained most easily and offer the greatest benefit should be targeted first. • Opportunities in the low-risk (medium gray) zone should be monitored
• Interviewing techniques draw on experience and historical data to quantify the probability and impact of risks on project objectives. • The information needed depends upon the type of probability distributions that will be used. For instance, information would be gathered on the optimistic (low), pessimistic (high), and most likely scenarios for some commonly used distributions. • Documenting the rationale of the risk ranges and the assumptions behind them are important components of the risk interview because they can provide insight on the reliability and credibility of the analysis
• Schedule management plan• Cost management plan• Quality management plan• Procurement management plan• Human resource management plan• Work breakdown structure• Schedule baseline• Cost performance baseline
Risks that are not assessed as important in the Perform Qualitative Risk Analysis process can be placed on a watchlist for continued monitoring
1. Risk Register Updates2. Organizational Process Assets Updates3. Change Requests4. Project Management Plan Updates5. Project Document Updates
requirements are well defined and seller has the capacity to handle the risk
• specifies combinations of probability and impact that lead to rating the risks as low, moderate, or high priority. • The dark gray area (with the largest numbers) represents high risk, the medium gray area (with the smallest numbers) represents low risk, and the light gray area (within-between numbers) represents moderate risk.• In addition, it can develop ways to determine one overall rating for each risk. • An overall project rating scheme can be developed to reflect the organization's preference for one objective over another and using those preferences to develop a weighting of the risks that are assessed by objective. • Finally, opportunities and threats can be handled in the same matrix using definitions of the different levels of impact that are appropriate for each
investigates the likelihood that each specific risk will occur
• Brainstorming• Delphi Technique• Interviewing• Root Cause Analysis
• Exploit• Share• Enhance• Accept
• Some responses are designed for use only if certain events occur. • For some risks, it is appropriate for the project team to make a response plan that will only be executed under certain predefined conditions, if it is believed that there will be sufficient warning to implement the plan. • Events that trigger the contingency response, such as missing intermediate milestones or gaining higher priority with a supplier, should be defined and tracked

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