Project Risk Management

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Questions and Answers

In project management, what is the primary difference between risk mitigation and risk acceptance?

  • Risk mitigation transfers the risk to a third party, while risk acceptance retains the risk within the project team.
  • Risk mitigation involves taking steps to reduce the probability or impact of a risk, while risk acceptance means acknowledging the risk but taking no action. (correct)
  • Risk mitigation is used for positive risks, while risk acceptance is used for negative risks.
  • Risk mitigation requires immediate action, while risk acceptance is a passive approach used only when there is insufficient time for other responses.

A company is deciding between investing in two projects with different risk profiles. Project A has a high potential return but also a high probability of failure, while Project B has a lower potential return but is considered very safe. How should the company make its decision?

  • Evaluate both the potential return and the probability of success for each project, considering the company's risk tolerance. (correct)
  • Always choose Project B because minimizing risk is the most important factor.
  • Choose the project that aligns with the CEO's personal preference.
  • Always choose Project A because high potential return is the most important factor.

Which of the following methods is LEAST effective for identifying potential project risks?

  • Consulting with subject matter experts.
  • Brainstorming sessions with project stakeholders.
  • Reviewing historical data from similar projects.
  • Ignoring feedback from junior team members to avoid unnecessary concerns. (correct)

In the context of risk management, what does a 'risk breakdown structure' (RBS) accomplish?

<p>It categorizes risks hierarchically to provide a structured overview of project risks. (D)</p> Signup and view all the answers

A project team has identified a risk with a high probability of occurrence but a low potential impact. What is the MOST appropriate initial course of action?

<p>Develop a contingency plan and monitor the risk to see if its impact increases. (D)</p> Signup and view all the answers

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