PMP Exam Quiz 03

Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.

Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives such as scope, schedule, cost, and quality. A risk may have one or more causes and, if it occurs, it may have one or more impacts. Project risk has its origins in the uncertainty present in all projects.

Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives such as scope, schedule, cost, and quality. A risk may have one or more causes and, if it occurs, it may have one or more impacts. Project risk has its origins in the uncertainty present in all projects. Known risks are those that have been identified and analyzed, making it possible to plan responses for those risks. Known risks that cannot be managed proactively, should be assigned a contingency reserve. Unknown risks cannot be managed proactively and therefore may be assigned a management reserve. A negative project risk that has occurred is considered an issue.

Overall project risk represents the effect of uncertainty on the project as a whole. It is more than the sum of the individual risks within a project, since it includes all sources of project uncertainty. It represents the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.

Overall project risk represents the effect of uncertainty on the project as a whole. It is more than the sum of the individual risks within a project, since it includes all sources of project uncertainty. It represents the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.

The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three themes:
• Risk appetite
• Risk tolerance
• Risk threshold

The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three themes:
• Risk appetite, which is the degree of uncertainty an entity is willing to take on in anticipation of a reward.
• Risk tolerance, which is the degree, amount, or volume of risk that an organization or individual will withstand.
• Risk threshold, which refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest.

The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three themes:
• Risk appetite, which is the degree of uncertainty an entity is willing to take on in anticipation of a reward.
• Risk tolerance, which is the degree, amount, or volume of risk that an organization or individual will withstand.
• Risk threshold, which refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest.

The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three themes:
• Risk appetite, which is the degree of uncertainty an entity is willing to take on in anticipation of a reward.
• Risk tolerance, which is the degree, amount, or volume of risk that an organization or individual will withstand.
• Risk threshold, which refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest.

Risk threshold, which refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest. Below that risk threshold, the organization will accept the risk. Above that risk threshold, the organization will not tolerate the risk.

Plan Risk Management is the process of defining how to conduct risk management activities for a project. The key benefit of this process is it ensures that the degree, type, and visibility of risk management are commensurate with both the risks and the importance of the project to the organization.

Plan Risk Management is the process of defining how to conduct risk management activities for a project. The risk management plan is vital to communicate with and obtain agreement and support from all stakeholders to ensure the risk management process is supported and performed effectively over the project life cycle. Careful and explicit planning enhances the probability of success for other risk management processes. Planning is also important to provide sufficient resources and time for risk management activities and to establish an agreed upon basis for evaluating risks. The Plan Risk Management process should begin when a project is conceived and should be completed early during project planning.

Plan Risk Management: Inputs
1. Project Management Plan
2. Project Charter
3. Stakeholder Register
4. Enterprise Environmental Factors
5. Organizational Process Assets

Plan Risk Management: Tools and Techniques
1. Analytical Techniques
2. Expert Judgment
3. Meetings

Analytical techniques are used to understand and define the overall risk management context of the project. Risk management context is a combination of stakeholder risk attitudes and the strategic risk exposure of a given project based on the overall project context.

Project teams hold planning meetings to develop the risk management plan. Attendees at these meetings may include the project manager, selected project team members and stakeholders, anyone in the organization with responsibility to manage the risk planning and execution activities, and others, as needed. High-level plans for conducting the risk management activities are defined in these meetings. Risk management cost elements and schedule activities should be developed for inclusion in the project budget and schedule, respectively. Risk contingency reserve application approaches may be established or reviewed. Risk management responsibilities should be assigned.

Timing.
Defines when and how often the risk management processes will be performed throughout the project life cycle, establishes protocols for application of schedule contingency reserves, and establishes risk management activities for inclusion in the project schedule.

A risk breakdown structure (RBS) helps the project team to look at many sources from which project risk may arise in a risk identification exercise. Different RBS structures will be appropriate for different types of projects.

A risk breakdown structure (RBS) helps the project team to look at many sources from which project risk may arise in a risk identification exercise. Different RBS structures will be appropriate for different types of projects. An organization can use a previously prepared custom categorization framework, which may take the form of a simple list of categories or may be structured into an RBS.

A probability and impact matrix is a grid for mapping the probability of each risk occurrence and its impact on project objectives if that risk occurs. Risks are prioritized according to their potential implications for having an effect on the project’s objectives.

A probability and impact matrix is a grid for mapping the probability of each risk occurrence and its impact on project objectives if that risk occurs. 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 matrix. The specific combinations of probability and impact that lead to a risk being rated as “high,” “moderate,” or “low” importance are usually set by the organization.

Identify Risks is the process of determining which risks may affect the project and documenting their characteristics. The key benefit of this process is the documentation of existing risks and the knowledge and ability it provides to the project team to anticipate events.

Identify Risks is the process of determining which risks may affect the project and documenting their characteristics. The key benefit of this process is the documentation of existing risks and the knowledge and ability it provides to the project team to anticipate events. Identify risks is an iterative process, because new risks may evolve or become known as the project progresses through its life cycle. The process should involve the project team so they can develop and maintain a sense of ownership and responsibility for the risks and associated risk response actions.

Identify Risks: Tools and Techniques
1. Documentation Reviews
2. Information Gathering Techniques
3. Checklist Analysis
4. Assumptions Analysis
5. Diagramming Techniques
6. SWOT Analysis
7. Expert Judgment

The Delphi technique is a way to reach a consensus of experts. Project risk experts participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas about the important project risks.

The Delphi technique is a way to reach a consensus of experts. Project risk experts participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas about the important project risks. The responses are summarized and are then recirculated to the experts for further comment. Consensus may be reached in a few rounds of this process. The Delphi technique helps reduce bias in the data and keeps any one person from having undue influence on the outcome.

Root cause analysis.
Root-cause analysis is a specific technique used to identify a problem, discover the underlying causes that lead to it, and develop preventive action.

Risk identification checklists are developed based on historical information and knowledge that has been accumulated from previous similar projects and from other sources of information. The lowest level of the RBS can also be used as a risk checklist. The checklist should be pruned from time to time to remove or archive related items. The checklist should be reviewed during project closure to incorporate new lessons learned and improve it for use on future projects.

Risk identification checklists are developed based on historical information and knowledge that has been accumulated from previous similar projects and from other sources of information. The lowest level of the RBS can also be used as a risk checklist. While a checklist may be quick and simple, it is impossible to build an exhaustive one, and care should be taken to ensure the checklist is not used to avoid the effort of proper risk identification. The team should also explore items that do not appear on the checklist. Additionally, the checklist should be pruned from time to time to remove or archive related items. The checklist should be reviewed during project closure to incorporate new lessons learned and improve it for use on future projects.

Assumptions Analysis
Every project and its plan is conceived and developed based on a set of hypotheses, scenarios, or assumptions. Assumptions analysis explores the validity of assumptions as they apply to the project. It identifies risks to the project from inaccuracy, instability, inconsistency, or incompleteness of assumptions.