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Questions and Answers
What is the definition of a risk in project management?
What is the definition of a risk in project management?
What is the primary purpose of risk management?
What is the primary purpose of risk management?
Which type of risk is identified and analyzed with a planned response?
Which type of risk is identified and analyzed with a planned response?
What is a characteristic of an unknown risk?
What is a characteristic of an unknown risk?
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What does a positive risk aim to do in project management?
What does a positive risk aim to do in project management?
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What would be classified as a risk that has happened?
What would be classified as a risk that has happened?
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Which of the following is a potential impact of a risk on a project?
Which of the following is a potential impact of a risk on a project?
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What might increase the impact of a risk if it occurs?
What might increase the impact of a risk if it occurs?
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What is the impact of having too many projects at once in an organization?
What is the impact of having too many projects at once in an organization?
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Which process involves defining options, actions, and contingency plans in risk management?
Which process involves defining options, actions, and contingency plans in risk management?
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What does the Risk Breakdown Structure (RBS) help to define?
What does the Risk Breakdown Structure (RBS) help to define?
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What is one potential positive outcome of an external company delivering a project deliverable ahead of schedule?
What is one potential positive outcome of an external company delivering a project deliverable ahead of schedule?
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What is the purpose of performing qualitative risk analysis?
What is the purpose of performing qualitative risk analysis?
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What is indicated by the probability scale in risk management?
What is indicated by the probability scale in risk management?
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What could be a negative consequence if an external company fails to deliver on time?
What could be a negative consequence if an external company fails to deliver on time?
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Which of the following best describes the guidelines for determining potential impact?
Which of the following best describes the guidelines for determining potential impact?
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What does qualitative analysis primarily help identify?
What does qualitative analysis primarily help identify?
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What is used in quantitative analysis to gather information about risks?
What is used in quantitative analysis to gather information about risks?
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What is the Expected Monetary Value (EMV) primarily used for?
What is the Expected Monetary Value (EMV) primarily used for?
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Which of the following represents a risk probability in the provided example?
Which of the following represents a risk probability in the provided example?
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What does a low impact low probability risk allow project managers to do?
What does a low impact low probability risk allow project managers to do?
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What is the purpose of updating the risk register in quantitative analysis?
What is the purpose of updating the risk register in quantitative analysis?
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What might be a result of performing sensitivity analysis?
What might be a result of performing sensitivity analysis?
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In the context of risks, what does 'root cause' refer to?
In the context of risks, what does 'root cause' refer to?
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What is the Expected Monetary Value (EMV) for the risk of high winds?
What is the Expected Monetary Value (EMV) for the risk of high winds?
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Which risk has the highest positive EMV?
Which risk has the highest positive EMV?
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What is the total EMV when summing all risks?
What is the total EMV when summing all risks?
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What is the net cost for renting a heavier RV during low winds?
What is the net cost for renting a heavier RV during low winds?
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Which tactic is used to deal with risk by preventing it from happening?
Which tactic is used to deal with risk by preventing it from happening?
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What is the EMV for the risk of an RV rental being unavailable?
What is the EMV for the risk of an RV rental being unavailable?
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When renting a lighter RV, what is the total EMV?
When renting a lighter RV, what is the total EMV?
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What is an example of risk transfer?
What is an example of risk transfer?
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What is the process of ensuring that a positive risk occurs in a project?
What is the process of ensuring that a positive risk occurs in a project?
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Which of the following options describes the strategy of transferring risk to another party?
Which of the following options describes the strategy of transferring risk to another party?
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What is the purpose of monitoring risks in a project?
What is the purpose of monitoring risks in a project?
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Which technique is NOT commonly used for monitoring and controlling risks?
Which technique is NOT commonly used for monitoring and controlling risks?
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What action should be taken when a positive opportunity arises?
What action should be taken when a positive opportunity arises?
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Which of the following best describes 'Accepting' a positive risk?
Which of the following best describes 'Accepting' a positive risk?
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What does variance analysis help to assess in the context of risk management?
What does variance analysis help to assess in the context of risk management?
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Which of the following describes the concept of 'Reassessment' in risk management?
Which of the following describes the concept of 'Reassessment' in risk management?
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Study Notes
Project Risk Management
- Project risk management is a process used to identify and plan for potential risks that could affect the project.
- Risks can positively or negatively impact a project's scope, schedule, cost, or quality.
- Risks are uncertain events or conditions that if realized, would affect at least one project objective.
- Risks always occur in the future.
Types of Risk
- Known Risk: risks are identified and analyzed, with a planned response.
- Unknown Risk: risks that cannot proactively be managed. Contingency plans are required.
- Positive Risk: aim to maximize opportunities where good things occur.
- Negative Risk: minimize potential project threats.
- Risk that has happened: a past risk that is no longer a risk, but a project issue.
Risk Examples
- Environmental Permit: negative if the permit isn't granted on time; positive if the project is granted the permit on the time.
- Limited expertise: positive if there is no limit on the expertise needed, negative if there is.
- Multiple Projects: negative if the organization has many demands on it and cannot respond as needed by the projects, positive if projects can share resources effectively.
- External Company: negative if the company does not deliver on time, positive if the company delivers ahead of time.
Project Risk Management Processes
- Plan Risk Management: how to perform project risk management, document which risks may affect the project, and prioritize risks for further analysis.
- Identify Risks: document which risks may affect a project.
- Perform Qualitative Risk Analysis: numerical models of risk analysis.
- Perform Quantitative Risk Analysis: options, actions, and contingency plans.
- Plan Risk Responses: start and manage the risk plan.
- Monitor and Control Risks: start and manage the risk plan.
1 - Plan Risk Management
- Risk Categories: broad categories of risk the project involves.
- Risk Breakdown Structure: breaks down risk categories into more specific and relevant project components.
- Guidelines for determining the potential impact: defines different impact levels for time and budget, example: 2-day impact is a major or minor impact.
- Probability scale: Defines probability levels, used for analysing risks.
1 - RBS - Risk Breakdown Schedule
- RBS is similar to Work Breakdown Structure (WBS)
- This defines risk categories for the project. and details out major risk areas.
- Categories include: Technical, External, Organizational, Project management, Estimating, Planning, Controlling, and Communication.
3 & 4 - Perform Qualitative & Quantitative Analysis
- Qualitative Analysis: determine the likelihood of a risk and the impact it could have on the project budget.
- Quantitative Analysis: Gather information, analyze information (sensitivity analysis, expected monetary value, modeling, and simulation), Update the risk register.
EMV (Expected Monetary Value)
- A way to quantify risk.
- This defines and calculates the monetary value of a decision, through the use of probability, impact, and multiple decision nodes and paths.
EMV Applied on Camping Trip Project
- Steps to apply EMV on a project: Start with probability and impact of each risk, Calculate the EMV for each risk.
Applying EMV in 2 Ways
- Find the EMV value for all risks.
- Find the monetary value of a decision and compare the two decisions.
5 - Plan Risk Response
- What planned responses or tactics can be used to deal with risks.
4 Ways Negative Risk is Dealt With
- Avoid: prevent the risk from happening.
- Mitigate: take action to minimize or reduce the potential damage.
- Transfer: transfer the risk to another party (e.g., insurance).
- Accept: accept the risk if it cannot be avoided, mitigated, or transferred.
4 Ways Positive Risk is Dealt With
- Exploit: ensure risk happens.
- Share: allocate the responsibility to a third party that is best to capture the opportunity.
- Enhance: increase the probability and/or the positive impact of the opportunity.
- Accept: be willing to take advantage of it if it comes along.
6 - Monitor Risk
- What new risks have happened?
- What risks have not happened?
- What has been the impact of risks happening?
Monitor & Control Risks
- The process of tracking, identifying, and analyzing risk response plans.
- Enables project decisions to be based on current information about risk exposure.
Tools & Techniques Used to Monitor and Control Risks
- Risk reassessment: revisiting previously identified risks.
- Risk audits.
- Variance and trend analysis: comparing actual results against planned projections.
- Technical performance measurement.
- Reserve analysis: evaluating resources.
- Status meetings: communicating progress and concerns.
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Description
This quiz covers the fundamentals of project risk management, focusing on the identification, analysis, and planning of potential risks that could impact projects. It explores the different types of risks, including known, unknown, positive, and negative risks, and provides examples of each. Test your knowledge on managing project uncertainties effectively.
