Head First PMP 4th Edition - risk management Exam Questions and Answers 2024

1. The project manager for a construction project discovers that the local city council may change the building code to allow adjoining properties to combine their sewage systems. She knows that a competitor is about to break ground in the adjacent lot and contacts him to discuss the possibility of having both projects save costs by building a sewage system for the two projects. This is an example of which strategy? A. Mitigate B. Share C. Accept D. Exploit - Correct Answers 1. Answer: B Sharing is when a project manager figures out a way to use an opportunity to help not just her project but another project or person as well. 2. Which of the following is NOT a risk response technique? A. Exploit B. Transfer C. Mitigate D. Collaborate - Correct Answers 2. Answer: D Collaborating is a conflict resolution technique. 3. You are using an RBS to manage your risk categories. What process are you performing? A. Plan Risk Management B. Identify Risks C. Perform Qualitative Risk Analysis D. Perform Quantitative Risk Analysis - Correct Answers 3. Answer: A You use an RBS to figure out and organize your risk categories even before you start to identify them. Then you decompose the categories into individual risks as part of Identify Risks. 4. Which of the following is used to monitor low-priority risks? A. Triggers B. Watch lists C. Probability and Impact matrix D. Monte Carlo analysis - Correct Answers 4. Answer: B Your risk register should include watch lists of low-priority risks, and you should review those risks at every status meeting to make sure that none of them have occurred. 5. You're managing a construction project. There's a 30% chance that weather will cause a three-day delay, costing $12,000. There's also a 20% chance that the price of your building materials will drop, which will save $5,000. What's the total EMV for both of these? A. -$3,600 B. $1,000 C. -$2,600 D. $4,600 - Correct Answers 5. Answer: C The expected monetary value (or EMV) of the weather risk is the probability (30%) times the cost ($12,000), but don't forget that since it's a risk, that number should be negative. So its EMV is 30% x -$12,000 = -$3,600. The building materials opportunity has an EMV of 20% x $5,000 = $1,000. Add them up and you get -$3,600 + $1,000 = -$2,600. 6. Joe is the project manager of a large software project. When it's time to identify risks on his project, he contacts a team of experts and sends them a list of questions to help them all come up with a list of risks and send it in. What technique is Joe using? A. SWOT B. Ishikawa diagramming C. Interviews D. Brainstorming - Correct Answers 6. Answer: C Using the Interview technique, experts supply their opinions of risks for your project so that they each get a chance to think about the project. 7. Susan is the project manager on a construction project. When she hears that her project has run into a snag due to weeks of bad weather on the job site, she says "No problem, we have insurance that covers cost overruns due to weather." What risk response strategy did she use? A. Exploit B. Transfer C. Mitigate D. Avoid - Correct Answers 7. Answer: B Susan bought an insurance policy to cover cost overruns due to weather. She transferred the risk from her company to the insurance company. 8. You're performing Identify Risks on a software project. Two of your team members have spent half of the meeting arguing about whether or not a particular risk is likely to happen on the project. You decide to table the discussion, but you're concerned that your team's motivation is at risk. The next item on the agenda is a discussion of a potential opportunity on the project in which you may be able to purchase a component for much less than it would cost to build. Which of the following is NOT a valid way to respond to an opportunity? A. Exploit B. Transfer C. Share D. Enhance - Correct Answers 8. Answer: B You wouldn't want to transfer an opportunity to someone else! You always want to find a way to use that opportunity for the good of the project. That's why the response strategies for opportunities are all about figuring out ways to use the opportunity to improve your project (or another, in the case of sharing). 9. Risks that are caused by the response to another risk are called: A. Residual risks B. Secondary risks C. Cumulative risks D. Mitigated risks - Correct Answers 9. Answer: B A secondary risk is a risk that could happen because of your response to another risk. 10. What's the main output of the Risk Management processes? A. The Risk Management plan B. The risk breakdown structure C. Work performance information D. The risk register and project documents updates - Correct Answers 10. Answer: D The processes of Risk Management are organized around creating the risk register, and updating it as part of project documents updates. 11. Tom is a project manager for an accounting project. His company wants to streamline its payroll system. The project is intended to reduce errors in the accounts payable system and has a 70% chance of saving the company $200,000 over the next year. It has a 30% chance of costing the company $100,000. What's the project's EMV? A. $170,000 B. $110,000 C. $200,000 D. $100,000 - Correct Answers 11. Answer: B $200,000 Å~ 0.70 = $140,000 savings, and $100,000 x 0.30 = -$30,000 expenses. Add them together and you get $110,000. 12. What's the difference between management reserves and contingency reserves? A. Management reserves are used to handle known unknowns, while contingency reserves are used to handle unknown unknowns. B. Management reserves are used to handle unknown unknowns, while contingency reserves are used to handle known unknowns. C. Management reserves are used to handle high-priority risks, while contingency reserves are used to handle low-priority risks. D. Management reserves are used to handle low-priority risks, while contingency reserves are used to handle high-priority risks. - Correct Answers 12. Answer: B Contingency reserves are calculated during Perform Quantitative Risk Analysis based on the risks you've identified. You can think of a risk as a "known unknown"—an uncertain event that you know about, but which may not happen—and you can add contingency reserves to your budget in order to handle them. Management reserves are part of Cost Management—you use them to build a reserve into your budget for any unknown events that happen. 13. How often should a project manager discuss risks with the team? A. At every milestone B. Every day C. Twice D. At every status meeting - Correct Answers 13. Answer: D Risk monitoring and response is so important that you should go through your risk register at every status meeting! 14. Which of the following should NOT be in the risk register? A. Watch lists of low-priority risks B. Relative ranking of project risks C. Root causes of each risk D. Probability and Impact matrix - Correct Answers 14. Answer: D The Probability and Impact matrix is a tool that you use to analyze risks. You might find it in your Project Management plan, but it's not included in the risk register. 15. Which of the following is NOT true about Risk Management? A. The project manager is the only person responsible for identifying risks. B. All known risks should be added to the risk register. C. Risks should be discussed at every team meeting. D. Risks should be analyzed for impact and priority. - Correct Answers 15. Answer: A It's really important that you get the entire team involved in the Identify Risks process. The more people who look for risks, the more likely it is that you'll find the ones that will actually occur on your project. 16. You're managing a project to remodel a kitchen. You find out from your supplier that there's a 50% chance that the model of oven that you planned to use may be discontinued, and you'll have to go with one that costs $650 more. What's the EMV of that risk? A. $650 B. -$650 C. $325 D. -$325 - Correct Answers 16. Answer: D Even though this looks a little wordy, it's just another EMV question. The probability of the risk is 50%, and the cost is -$650, so multiply the two and you get -$325.