While implementing the risk response plan for a previously identified risk, some secondary risks were identified but not captured on the risk register. The project manager decided to review the risk management plan to ensure this does not happen for future, similar situations.
What should the project manager do next?
A. Identify secondary or residual risks for associated risk plans.
B. Develop risk response plans for all identified risks.
C. Update the communications management plan to avoid future issues
D. Monitor and control secondary and residual risks in the risk register.
Correct Answer: A
Explanation: The project manager should monitor and control secondary and residual risks in the risk register. This will ensure that any new risks identified during the implementation of the risk response plan are captured and managed effectively. Monitoring and controlling risks is a continuous process that helps in identifying, analyzing, and planning for new risks as well as updating the risk register as needed.
According to the PMI Risk Management Professional (PMI-RMP) Examination Content Outline, one of the tasks under the domain of Risk Response Planning is to "identify and assess the effectiveness of alternative strategies to reduce threats or enhance opportunities, such as mitigation, transference, avoidance, and acceptance" 1. This implies that the project manager should also consider the potential secondary or residual risks that may arise from implementing the chosen risk response strategy. Secondary risks are new risks that are created as a direct result of implementing a risk response, while residual risks are those that remain after the risk response has been executed 2. Both types of risks should be identified and assessed for their impact and probability, and added to the risk register for further monitoring and control. Therefore, the correct answer is A. References: 1: PMI Risk Management Professional (PMI-RMP) Examination Content Outline, page 91 2: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 4362
Question 552:
Multiple new risks have come up on a project that were not included on the risk register. The project manager met with the team to explain that risk management is critical for the success of the project, and risk identification is key.
What should the project manager do next?
A. Review assumptions and constraints around risks.
B. Develop the risk response plans for identified risks.
C. Determine the likelihood and impact of the risks.
D. Apply an iterative approach to risk identification.
Correct Answer: D
Explanation: The project manager should apply an iterative approach to risk identification, which involves continuous risk identification throughout the project lifecycle. This will help to identify and address new risks that may arise during the project.
According to the PMBOK Guide, risk identification is the process of determining which risks may affect the project and documenting their characteristics. It is an iterative process because new risks may evolve or become known only as the project progresses through its life cycle. There are many techniques available for risk identification and assessment, such as brainstorming, interviews, checklists, SWOT analysis, cause and effect diagrams, etc. The project manager should apply an iterative approach to risk identification to ensure that all relevant risks are captured and updated throughout the project. The project manager should also involve the project team and other stakeholders in the risk identification process to obtain their input and perspectives. The other options are not valid for the next step after explaining the importance of risk management to the team: Review assumptions and constraints around risks: This is a technique for risk identification, but it is not the only one. The project manager should use a combination of techniques to identify risks, not just focus on one aspect. Also, reviewing assumptions and constraints is not the same as applying an iterative approach, which implies repeating the risk identification process at regular intervals or when changes occur. Develop the risk response plans for identified risks: This is a step in the Plan Risk Responses process, which comes after the Perform Qualitative Risk Analysis and Perform Quantitative Risk Analysis processes. The project manager should not develop the risk response plans before identifying and analyzing the risks. Determine the likelihood and impact of the risks: This is a step in the Perform Qualitative Risk Analysis process, which comes after the Identify Risks process. The project manager should not determine the likelihood and impact of the risks before identifying them. References: PMBOK Guide1, Risk Management Professional (PMI-RMP) Cert Guide
Question 553:
A risk manager documents the causes in the risk register and needs to ensure the risk is adequately described. What is critical for the risk manager to consider when describing the causes?
A. Each cause has a degree of uncertainty
B. Each cause has well defined owner
C. The causes represent actual conditions
D. The causes must be validated by the risk owner
Correct Answer: C
Explanation: When describing the causes of a risk, it is critical for the risk manager to ensure that the causes represent actual conditions, as this will help in the accurate identification and assessment of the. According to the PMBOK Guide, a risk is defined as "an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives" (page 720). A risk can be described by its causes, effects, and probability of occurrence. The causes are the factors or circumstances that give rise to the risk, and they should represent the actual conditions that exist or may exist in the project environment. The causes should not be based on assumptions, opinions, or speculations, but on facts, evidence, or data. Therefore, option C is the correct answer. Option A is incorrect because not every cause has a degree of uncertainty. Some causes may be certain or deterministic, such as contractual obligations, regulatory requirements, or physical laws. Uncertainty is a characteristic of the risk itself, not the cause. Option B is incorrect because not every cause has a well-defined owner. The owner is the person or entity who is assigned the responsibility and authority to manage the risk, not the cause. The owner should be identified after the risk is analyzed and prioritized, not before. Option D is incorrect because the causes do not need to be validated by the risk owner. The risk owner is the person or entity who is accountable for the risk response, not the risk identification. The causes should be validated by the risk manager or the risk identification team, who are responsible for collecting and documenting the risk information.
Question 554:
A risk manager reviews a Monte Carlo schedule risk analysis model before sharing the results with the project manager. The risk manager notices that activity correlations were not included in the model.
What is an effect of adding the correlation to the model?
A. Allows more risks to be included in the model.
B. Reduces the project completion duration.
C. Increases the standard deviation of the model.
D. Increases the probability of correlated activities finishing on time.
Correct Answer: C
Explanation: Adding correlation to the model accounts for the relationship between activities, which can result in increased variability in the model's outcomes. This will increase the standard deviation, which is a measure of the uncertainty in the model. According to the PMBOK Guide, 6th edition, Chapter 11: Project Risk Management1, an effect of adding the correlation to the Monte Carlo schedule risk analysis model is that it increases the standard deviation of the model. This is because: Correlation is the statistical relationship between two or more variables. In a schedule risk analysis, correlation can be used to model the dependency between the durations of different activities. For example, if two activities are positively correlated, it means that if one activity takes longer than expected, the other activity is also likely to take longer than expected. Conversely, if two activities are negatively correlated, it means that if one activity takes longer than expected, the other activity is likely to take shorter than expected. A Monte Carlo schedule risk analysis is a simulation technique that uses random values for uncertain variables, such as activity durations, to generate possible outcomes for the project schedule. The simulation is repeated many times to produce a probability distribution of the project completion date and duration. The standard deviation is a measure of the variability or dispersion of the distribution. A higher standard deviation means that the distribution is more spread out and less predictable. Adding correlation to the Monte Carlo schedule risk analysis model increases the standard deviation of the model because it introduces more variability and uncertainty to the simulation. Correlated activities can have a cumulative effect on the project schedule, either positively or negatively, depending on the direction and strength of the correlation. This can result in more extreme outcomes for the project completion date and duration, which increase the spread of the distribution and the standard deviation. References: PMBOK Guide, 6th edition, Chapter 11: Project Risk Management1 Risk Management Professional (PMI-RMP) ert Guide2
Question 555:
A new risk manager has been assigned to a project experiencing delays, quality issues, low performance, and client complaints. The work is being completed with the client's vendor, which apparently has been causing all of the issues.
What should the risk manager do first?
A. Enhance risk identification.
B. Review the contingency reserves.
C. Create a risk response plan.
D. Review the risk registry.
Correct Answer: D
The risk registry is a document that records the identified risks, their characteristics, their status, and their responses. It is a key input for risk management and a source of information for project stakeholders. The risk manager should review the risk registry first to understand the current state of the project risks, especially the ones related to the client's vendor, and to evaluate the effectiveness of the risk responses implemented so far. Enhancing risk identification, reviewing the contingency reserves, and creating a risk response plan are possible actions that the risk manager may take after reviewing the risk registry, but they are not the first thing to do. References: PMI Risk Management Professional (PMI-RMP) ontent Outline1, PMI Practice Standard for Project Risk Management2, Risk Management Professional (PMI-RMP) Cert Guide3
Question 556:
A project has a S0S4 chance of a US$100 000 profit and a 40% chance of a US$100,000 loss. What is the expected monetary value for this project?
A. US$20.000 loss
B. US$20,000 profit
C. US$40,000 loss
D. US$100,000 profit
Correct Answer: B
Explanation: The expected monetary value (EMV) for this project can be calculated as follows: (0.6 x US$100,000) - (0.4 x US$100,000) = US$60,000 - US$40,000 = US$20,000 profit.
The EMV of a project is the weighted average of the possible outcomes, which are a US$100,000 profit or a US$100,000 loss in this case. To calculate the EMV, we multiply the probability of each outcome by its monetary value, and then add them together. The formula is: EMV = (Probability of profit x Value of profit) + (Probability of loss x Value of loss) In this case, the probability of profit is 60%, and the value of profit is US$100,000. The probability of loss is 40%, and the value of loss is -US$100,000 (negative because it is a loss). Therefore, the EMV is: EMV = (0.6 x 100,000) + (0.4 x -100,000) EMV = 60,000 - 40,000 EMV = US$20,000 This means that the project has an expected monetary value of US$20,000 profit, which is the answer option B. The other options are incorrect because they do not match the EMV calculation. The EMV is a useful tool for comparing different projects or alternatives based on their expected values. However, it does not account for the variability or uncertainty of the outcomes, which may also affect the project decision making. For example, a project with a higher EMV but a higher risk may not be preferable to a project with a lower EMV but a lower risk. Therefore, the EMV should be used with caution and in conjunction with other risk analysis techniques. For more information on the EMV and other risk analysis methods, you can refer to the PMI Risk Management Professional (PMI-RMP) Examination Content Outline and Specifications, the A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, and the Expected Monetary Value (EMV): A Guide With Examples. I hope this helps you understand the concept of EMV and how to apply it to project risk management
Question 557:
During a meeting to develop the risk management plan, the risk manager recognizes that risks may be identified that could also impact other projects that the company is pursuing. What should the risk manager do?
A. Contact the risk managers of the other projects and inform them
B. Include an escalation process in the risk management plan
C. Take note of the extensive impact of these risks in the risk register
D. Address the unique characteristics of these risks on a case-by-case basis
Correct Answer: B
Explanation: The risk manager should include an escalation process in the risk management plan to address risks that may impact other projects. This ensures that any identified risks that could affect multiple projects are communicated and managed appropriately across the organization. The risk manager should include an escalation process in the risk management plan to deal with risks that may affect other projects or the organization as a whole. An escalation process is a set of procedures that defines how and when risks should be communicated to higher levels of authority or responsibility for decision making or resolution. The escalation process should specify the criteria, roles, responsibilities, and communication channels for escalating risks. The risk manager should follow the escalation process when identifying risks that may have extensive impacts beyond the scope of the project. The other options are not appropriate actions for the risk manager to take. Contacting the risk managers of the other projects and informing them is not sufficient, as it does not ensure that the risks are properly addressed or resolved. Taking note of the extensive impact of these risks in the risk register is not enough, as it does not involve the necessary stakeholders or decision makers. Addressing the unique characteristics of these risks on a case-by-case basis is not consistent, as it does not follow a standard process or protocol.
Question 558:
A project manager is assigned to a new project and is told they need to develop the project's risk register. When should the project manager identify the project risks?
A. Identify risks only at the project's midpoint for the stakeholders to review them
B. Ensure project team members proactively identify risks throughout the project to plan for possible response strategies
C. Identify risks at the beginning of the project because the risk posture will not change
D. Delegate risk identification to each team member and have them record the risks on separate risk registers for their areas
Correct Answer: B
Explanation: Risk identification should be an ongoing process throughout the project lifecycle. Encouraging project team members to proactively identify risks allows for continuous risk management and the development of appropriate response strategies as new risks emerge.
According to the PMI Risk Management Professional (PMI-RMP) Examination Content Outline1, one of the tasks in the domain of Risk Identification is to ensure that project team members proactively identify risks throughout the project life cycle, using various tools and techniques, to enable planning for possible risk response strategies1. Risk identification is an iterative process that should be performed regularly and frequently throughout the project, as new risks may emerge or existing risks may change due to internal or external factors2. The project manager should involve the project team members and other relevant stakeholders in the risk identification process, as they may have different perspectives, expertise, and insights on the project risks3. The project manager should not identify risks only at the project's midpoint for the stakeholders to review them, because that would be too late and ineffective to manage the risks that may have already occurred or escalated4. The project manager should not identify risks at the beginning of the project because the risk posture will not change, because that would be unrealistic and imprudent to assume that the project environment and conditions will remain static and predictable5. The project manager should not delegate risk identification to each team member and have them record the risks on separate risk registers for their areas, because that would create inconsistency, duplication, and fragmentation of the risk information, and prevent a holistic and integrated view of the project risks. References: 1: PMI Risk Management Professional (PMI-RMP) Examination Content Outline, page 82: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 3983: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 3994: Risk Identification: When and How Often to Do It During the Project Life Cycle5: Risk Management: Why Is It Important?. : Risk Register in Project Management - Project Management Academy.
Question 559:
A project manager has requested a risk manager facilitate risk identification on a project. While facilitating this effort, the project manager wants to ensure that stakeholders interact and provide their expertise so that an exhaustive list of risks is created.
Which risk identification technique should the risk manager use?
A. Prompt lists
B. Interviews
C. Delphi technique
D. Nominal group technique
Correct Answer: D
Explanation: The risk identification technique that the risk manager should use is the nominal group technique. This technique involves bringing stakeholders together to brainstorm potential risks and then ranking them based on their importance. This allows for interaction and collaboration among stakeholders, which can help ensure that an exhaustive list of risks is created. The nominal group technique is a risk identification technique that involves the interaction and collaboration of stakeholders to generate an exhaustive list of risks. It is a structured process that allows each participant to share their ideas independently, then rank and prioritize them as a group. This technique ensures that all opinions are considered and reduces the influence of dominant or biased individuals12 References: 1: PMI Risk Management Professional (PMI-RMP) Handbook, page 10 2: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Seventh Edition, page 11.2.2.1
Question 560:
A risk manager for a financial organization is assigned to support a project team in developing a custom software solution to manage loans. Which document should the risk manager request first from the project sponsor to identify major risks?
A. Risk management plan
B. Clients' credit scores
C. Organization's mission and vision
D. Historical data from the credit portfolio
Correct Answer: A
Explanation: According to the PMBOK Guide, 6th edition, Chapter 11: Project Risk Management1, the risk manager should request the risk management plan first from the project sponsor to identify major risks. This is because:
The risk management plan is a document that describes how risk management activities will be planned, structured, and performed throughout the project life cycle. The risk management plan provides guidance and direction for the risk
manager and the project team on how to identify, analyze, prioritize, respond, and monitor risks, as well as how to allocate resources, define roles and responsibilities, establish risk categories, and document risk-related information. The risk
management plan is a key input for the risk identification process, which is the process of determining which risks may affect the project and documenting their characteristics. The risk identification process involves using various tools and
techniques, such as brainstorming, interviews, checklists, assumptions and constraints analysis, SWOT analysis, expert judgment, and data gathering, to generate a comprehensive list of potential risks that may impact the project objectives,
such as scope, schedule, cost, quality, or stakeholder satisfaction. The risk management plan helps the risk manager to identify major risks by providing the following information:
The other options are not the best documents to request first from the project sponsor to identify major risks because:
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