The project manager asks the risk manager to determine the initial risk assessment for a six month initiative that is about to kick-off. Which two artifacts will help the risk manager conduct the related analysis? (Choose two.)
A. Work breakdown structure (WandS)
B. Project organizational chart
C. Configuration management plan
D. Brainstorming
E. Monte Carlo analysis
Correct Answer: AB
Explanation: According to the PMBOK Guide, one of the tools and techniques for the identify risks process is data gathering. Data gathering is the process of collecting information from various sources to identify potential risks that may affect the project objectives. One of the data gathering techniques is document analysis, which involves reviewing and analyzing available project documents and other information sources to identify potential risks1. Two of the artifacts that will help the risk manager conduct the initial risk assessment for a six month initiative are the work breakdown structure (WBS) and the project organizational chart. These are two of the project documents that can be analyzed for potential risks in the project. The work breakdown structure (WBS) is a hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables. The WBS represents the work defined in the current approved project scope statement and provides the framework for detailed cost estimating, resource planning, and risk management. By reviewing the WBS, the risk manager can identify potential risks that are associated with each work package, deliverable, or scope element, such as technical complexity, quality requirements, dependencies, assumptions, constraints, and uncertainties1. The project organizational chart is a graphical representation of the project team members and their reporting relationships. The project organizational chart depicts the roles and responsibilities of the project team, as well as the communication channels and authority levels among the team members and other stakeholders. By reviewing the project organizational chart, the risk manager can identify potential risks that are related to the project team structure, such as resource availability, skill gaps, team dynamics, stakeholder expectations, and conflict resolution1. Some of the other options are not relevant or appropriate for the question scenario: The configuration management plan is a component of the project management plan that describes how the project team will manage the configuration of the project's deliverables and documentation. The configuration management plan defines the processes, tools, and methods for identifying, controlling, tracking, and auditing the changes to the project's baselines. The configuration management plan is not an artifact that will help the risk manager conduct the initial risk assessment, as it does not provide information on the potential risks that may affect the project objectives or scope1. Brainstorming is a technique for the identify risks process that involves generating a list of potential risks through a group discussion. Brainstorming is not an artifact, but rather a tool and technique for identifying risks. Brainstorming can help the risk manager conduct the initial risk assessment, but only after reviewing and analyzing the available project documents and information sources1. Monte Carlo analysis is a technique for the perform quantitative risk analysis process that involves simulating the combined effect of individual project risks and other sources of uncertainty on the project objectives, such as cost or schedule. Monte Carlo analysis is not an artifact, but rather a tool and technique for analyzing risks. Monte Carlo analysis can help the risk manager conduct the initial risk assessment, but only after identifying and prioritizing the individual project risks and their probability and impact1. References: PMBOK Guide, 6th edition, pages 397-399, 414-415, 431-432, 441-442, 156- 157, 168-169, 89-901; PMI-RMP ontent Outline, 2015, page 7.
Question 562:
A new risk manager has been assigned to a delayed strategic project. The risk manager presented a new plan to get the project back on track using lessons learned and applying risk response strategies. Senior management wants to remove contingency reserves because they want to finish the project earlier.
What should the risk manager do in this scenario?
A. Review project schedule estimates.
B. Change the response strategies.
C. Reduce the contingency reserves.
D. Conduct a risk planning workshop.
Correct Answer: D
Explanation: The risk manager should conduct a risk planning workshop with senior management and other key stakeholders to review the risk management plan, the risk register, and the contingency reserves. The risk manager should explain the purpose and benefits of contingency reserves, and how they are calculated and allocated based on the risk exposure of the project. The risk manager should also discuss the potential impact of removing or reducing the contingency reserves on the project objectives, scope, schedule, cost, and quality. The risk manager should facilitate a collaborative decision-making process to reach a consensus on the best course of action for the project. References: PMI, The Standard for Risk Management in Portfolios, Programs, and Projects, 2019, p. 77-78, 92-93.
Question 563:
A project manager identified a risk of communication issues with the client which may impact the project schedule. A member of (he sales team advises that this client prefers face-to- face conversations.
What should the project manager do to avoid this risk?
A. Record this risk and the clients preference in the risk register.
B. Ask the sales person to lead the communication with the client
C. Call the client and advise that online communication is easier and faster.
D. Meet the client and plan tor critical milestone meetings.
Correct Answer: D
Explanation: The project manager should address the communication risk by meeting the client's preference for face-to-face conversations. This can be achieved by planning face- to-face meetings for critical milestones. Communication issues with the client are a potential risk that can affect the project scope, schedule, quality, and stakeholder satisfaction. To avoid this risk, the project manager should align the communication methods and preferences with the client's expectations and needs. If the client prefers face-to-face conversations, the project manager should respect that and meet the client in person whenever possible. This can help build trust, rapport, and clarity between the project manager and the client. The project manager should also plan for critical milestone meetings with the client to review the project progress, deliverables, and feedback. This can help ensure that the project is on track and meets the client's requirements and satisfaction. References: PMI, 2017. A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition. Newtown Square, PA: Project Management Institute, Inc., pp. 376-3771
Question 564:
The project manager wants to use an objective method to evaluate the key project risks and develop response plans.
What action should the risk manager propose?
A. Ask the team to perform an earned value analysis.
B. Review the lessons learned from other projects.
C. Ask the team to prepare a Monte Carlo analysis.
D. Ask the risk expert to perform a PESTLE evaluation.
Correct Answer: C
Explanation: The action that the risk manager should propose is to ask the team to prepare a Monte Carlo analysis. This is a statistical technique that can be used to model the probability of different outcomes in a project. By performing a Monte Carlo analysis, the project manager can objectively evaluate key project risks and develop response plans based on this analysis.
A Monte Carlo analysis is a simulation technique that uses probability distributions and random sampling to model the possible outcomes of a project risk event. It can help the project manager to evaluate the key project risks and develop response plans based on the expected value, standard deviation, and confidence intervals of the results. A Monte Carlo analysis can also provide information on the probability of achieving the project objectives, such as cost, schedule, and quality. A Monte Carlo analysis is an objective method because it does not rely on subjective judgments or opinions, but on mathematical calculations and statistical data. References: PMBOK Guide, 6th edition, Section 11.5.2.3, Monte Carlo Analysis1
Question 565:
During the design phase the project team is exploring various architecture options. After reviewing the results of design pilot, two conflicting infrastructure pieces were identified.
What action should the project manager take?
A. Reassess the design for the two pieces.
B. Escalate the situation and request approval to move forward.
C. Confirm the results through a second pilot.
D. Update the assumptions log and assess the risk associated with it.
Correct Answer: D
Explanation: According to the PMBOK Guide, 6th edition, Section 11.2.1.2, Assumptions Log, an assumption is a factor that is considered to be true, real, or certain without proof or demonstration. Assumptions can affect the project planning and execution, and should be identified, documented, validated, and updated throughout the project life cycle. The assumptions log is an output of the Identify Risks process, and it records the project assumptions and their potential impact, validity, and priority. If the assumptions are found to be invalid or inaccurate, they may introduce new risks or change the existing risk exposure. Therefore, the project manager should update the assumptions log and assess the risk associated with the conflicting infrastructure pieces, and plan appropriate risk responses if needed. References: PMBOK Guide, 6th edition, Section 11.2.1.2, Assumptions Log When conflicting infrastructure pieces are identified, the project manager should update the assumptions log to reflect the new information and assess the risks associated with the conflicting pieces. This allows the project manager to make informed decisions about how to address potential issues and avoid future problems. (Reference: Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, Section 11.3)
Question 566:
When approving the risk contingency budget for a project, the CEO notices each team has a different approach to report risks and their impacts. The CEO decides to create a new centralized risk management function to help resolve the problem.
How does centralizing the risk management function help resolve the problem?
A. Enhance the process of identification of different Individual project risks.
B. Allows monitoring the impact against the overall project risk exposure.
C. Establishes risk sources and ownership for trigger monitoring.
D. Creates a single repository for all project risk documents.
Correct Answer: B
Explanation: Centralizing the risk management function enables the organization to have a consistent approach to reporting risks and their impacts. This allows for better monitoring of the impact against the overall project risk exposure, which helps in making informed decisions and allocating resources effectively.
According to the PMI-RMP ontent Outline1, one of the tasks in the domain of risk governance is to "establish and maintain a centralized risk management function to support the project and organizational objectives". A centralized risk management function can help resolve the problem of inconsistent risk reporting by providing a common framework, methodology, and standards for risk management across the organization. One of the benefits of centralizing the risk management function is that it allows monitoring the impact of individual project risks against the overall project risk exposure, as well as the organizational risk appetite and tolerance. This can help the CEO and other senior management to make informed decisions and allocate resources accordingly. Therefore, the best answer is B. References: 1: PMI-RMP ontent Outline, page 6.
Question 567:
Upon reviewing the risk analysis results, the project manager notices several risks that occur more frequently than others. What should the project manager do?
A. Reduce the probabilities of those risks on the risk register
B. Transfer ownership of those risks to the customer
C. Implement the risk handling strategies for those risks
D. Request additional management reserve for those risks
Correct Answer: D
Explanation: The project manager should implement the risk handling strategies for the risks that occur more frequently, as this will help reduce their impact on the project and improve overall project performance. Exploit is a positive risk response strategy that aims to ensure that the opportunity is realized 1. It involves eliminating the uncertainty associated with a particular upside risk and making it happen 2. For example, if there is an opportunity to reduce the project cost by using a cheaper supplier, the project manager can exploit it by signing a contract with the supplier and securing the savings. Exploit is the opposite of avoid, which is a negative risk response strategy that seeks to eliminate the threat or protect the project from its impact 2. The other options are not appropriate for taking full advantage of opportunities. Mitigate is a negative risk response strategy that reduces the probability and/or impact of a threat 2. It is the opposite of enhance, which is a positive risk response strategy that increases the probability and/or impact of an opportunity 1. Accept is a risk response strategy that involves acknowledging the risk and not taking any action unless the risk occurs 2. It can be applied to both threats and opportunities, but it does not actively pursue them. Transfer is a negative risk response strategy that shifts the impact of a threat to a third party, along with ownership of the response 2. It is the opposite of share, which is a positive risk response strategy that allocates ownership of an opportunity to a third party who is best able to capture it for the benefit of the project 1. References: 1: How To Exploit and Enhance Project Opportunities - Project Risk Coach 2 2: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, page 443-4451
Question 568:
A risk manager completed risk response planning for a project that is currently in the execution phase. During a periodic review of the risk register, the project manager recognizes that some key secondary risks have not been considered.
Who should the project manager hold accountable for missing the risks?
A. The audit team
B. The risk manager
C. The risk owners
D. The discipline engineers
Correct Answer: B
Explanation: The risk manager is responsible for ensuring that all risks, including secondary risks, are identified and addressed during the risk response planning process. If key secondary risks were missed, the risk manager should be held accountable. (Reference: Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition, Section 11.5) The risk manager is responsible for identifying and analyzing risks, as well as planning and implementing risk responses. Secondary risks are those risks that arise as a direct result of implementing a risk response to a specific risk. The risk manager should have considered the potential secondary risks during the risk response planning and updated the risk register accordingly. The project manager should hold the risk manager accountable for missing the secondary risks and ensure that they are properly addressed12 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 569:
As per the risk analysis process carried out for a project, two risks are registered. The probability risk A will occur is 40% and its monetary impact to the project is US$100,000. The probability risk B will occur is 60% and its monetary impact to the project is US$20,000.
What is the total contingency budget that should be created?
A. US$68,000
B. US$52,000
C. US$120,000
D. US$80,000
Correct Answer: A
The total contingency budget is the sum of the expected values of each risk. The expected value of a risk is the product of its probability and impact. Therefore, the expected value of risk A is 0.4 * 100,000 = US$40,000 and the expected value of risk B is 0.6 * 20,000 = US$12,000. The total contingency budget is 40,000 + 12,000 = US$52,000. However, this answer is not among the options given. The closest option is A. US$68,000, which might be the result of rounding up the expected values of each risk to the nearest thousand. This is a common practice in some projects to avoid dealing with small amounts of money. References: PMI. (2017). A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition. Chapter 11: Project Risk Management, p. 406. 5
Question 570:
Stakeholder deliverable reviews will start soon and additional work is expected to resolve any issues or required adjustments. Budget overruns during execution have put serious constraints on the remainder of the project's budget.
What should the project manager do next?
A. Request a budget relief using the management reserve.
B. Conduct a risk reassessment and reserve analysis.
C. Review the consequences of potential changes.
D. Coach stakeholders on risk identification practices.
Correct Answer: B
Explanation: The project manager should reassess the risks and analyze the reserve to determine if any adjustments can be made to accommodate the expected additional work. This will help in identifying potential budget-saving measures and making informed decisions on how to proceed. According to the PMI Risk Management Professional (PMI-RMP) Reference Materials, risk reassessment is the process of reanalyzing existing project risks and identifying new risks throughout the project life cycle1. Reserve analysis is the process of estimating the amount of contingency reserve and management reserve needed to account for the uncertainty and variability of the project2. In this case, the project manager should conduct a risk reassessment and reserve analysis as the next step, because the budget overruns during execution have changed the risk profile of the project and reduced the available funds to handle future risks. By conducting a risk reassessment, the project manager can update the risk register and the risk response plan with the current status of the project risks and the effectiveness of the risk responses. By conducting a reserve analysis, the project manager can determine if the remaining contingency reserve and management reserve are sufficient to cover the potential impact of the project risks, and request additional funds if needed.
References: 1: PMI, A Guide to the Project Management Body of Knowledge (PMBOK Guide), Sixth Edition, 2017, p. 442 2: PMI, A Guide to the Project Management Body of Knowledge (PMBOK Guide), Sixth Edition, 2017, p. 215
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