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Larson & Gray Project Management Chapter 7

Risk
Uncertain even or condition that, if it occurs, has a positive or negative effect on project objectives.
Name the 4 steps of risk management process.
Step 1: Risk Identification
Step 2: Risk Assessment
Step 3: Risk Response Development
Step 4: Risk Response Control
Risk Identification
Step 1 in risk management process; analyze the project to identify sources of risk
Risk Assessment
Step 2 in risk management process; assess risks in terms of severity of impact; likelihood of occurring; and controllability
Risk Response Development
Step 3 in risk management process; develop a strategy to reduce possible damage; develop contingency plans
Risk Response Control
Step 4 in risk management process; implement risk strategy; monitor and adjust plan for new risks; change management
The cost of impact of a risk event in the project is ________ if the event occurs earlier rather than later.
Less
Error in time estimates, cost estimates, or design technology are biggest in which phases of the project?
Concept, planning, and start-up phases
The cost impact of a risk event occurring as a project proceeds through its life cycle tends to __________.
A) Slowly rise
B) Drop sharply and then level out
C) Rise sharply and then level out
D) Remain about the same
E) Slowly drop
A) Slowly rise
Which of the following is not one of the steps in the risk management process?
A) Risk response development
B) Risk assessment
C) Risk identification
D) Risk tracking
E) Risk response control
D) Risk Tracking
One common mistake made early in the risk identification process is
A) Not all possibilities are considered
B) Participants are over-optimistic
C) Participants are over-pessimistic
D) Focus on objectives and not on the events that could produce consequences.
E) Too much attention is given to past events
D) Focus on objectives and not on the events that could produce consequences.
The 1999 NASA Mars Climate Orbiter is an example of
A) Disaster avoidance through proactive risk management
B) Murphy’s Law
C) Proper use of critical thinking
D) Mismanaged risk control
E) Using historical records to assess risk
D) Mismanaged risk control
A list of questions that address traditional areas of uncertainty on a project is termed a risk
A) Profile
B) Questionnaire
C) Research
D) Query
E) Checklist
A) Profile
All of the following are included in the risk identification process except
A) Customers
B) Subcontractors
C) Competitors
D) Vendors
E) None of these are included
C) Competitors
The easiest and most commonly used technique for analyzing risks is _____ analysis.
A) Probability
B) Scenario
C) Payback
D) Risk/reward
E) Impact
B) Scenario
A risk profile is a list of questions that address traditional areas of uncertainty on a project that answers developed from:
A) When the event might occur in the project
B) Chances of the event occurring
C) Interaction with other parts of the project or with other projects
D) From previous, similar projects
E) Magnitude or severity of the event’s impact
D) From previous, similar projects
The risk assessment form contains all of the following except
A) Likelihood of the risk event occurring
B) Potential impact of the risk event
C) Who will detect the occurrence of the risk event.
D) Difficulty of detecting the occurrence of the risk event
E) When the risk event may occur
C) Who will detect the occurrence of the risk event.
Which of the following is not one of the probability analysis tools?
A) Ratio/range analysis
B) Decision tree
C) PERT simulation
D) PERT
E) All of these are probability analysis tools
A) Ratio/range analysis
The demolition of the Seattle Kingdome (Snapshot from Practice) is an example of which of the following?
A) Mitigating
B) Retaining
C) Ignoring
D) Transferring
E) Sharing
D) Transferring
Technical risks are:
A) Often the kind that can cause the project to be shut down.
B) Problematic
C) Imposed duration dates
D) Both A and B are correct
E) A, B, and C are all correct
D) Both A and B are correct
Detailing all identified risks, including descriptions, category, and probability of occurring, impact, responses, contingency plans, owners and current status is called:
A) Management reserves
B) Change control
C) Contingency reserves
D) Risk register
E) Risk profiles
D) Risk register
Change management systems are designed to accomplish all of the following except:
A) Track all changes that are to be implemented
B) Review, evaluates, and approve/disapprove proposed changes formally
C) Identify expected effects of proposed changes on schedule and budget
D) Reflect scope changes in baseline and performance measures
E) All of the above are correct
E) All of the above are correct
Elimination of the risk cause before the project begins
Avoiding risk
Reserve setup to cover identified risks that may occur and influence baseline tasks or costs. These reserves are typically controlled by the project manager and the project team.
Budget reserve
A defined process for authorizing and documenting changes in the scope of a project.
Change management system
A plan that covers possible identified project risks that may materialize over the life of the project.
Contingency plan
A percentage of the total project budget reserved for contingencies. The fund exists to cover unforeseen, new problems—not unnecessary overruns. The reserve is designed to reduce the risk of project delays. Management reserves are typically controlled by the project owner or project manager.
Management reserve
Action taken to either reduce the likelihood that a risk will occur and/or the impact the risk will have on the project.
Mitigating risk
Event that can have a positive impact on project objectives
Opportunity
Hierarchical depiction of the identified project risks arranged by risks category and subcategory that identifies the various areas and causes of potential risks.
Risk Breakdown Structure (RBS)
Details all identified risks, including descriptions, category, and probability of occurring, impact, responses, contingency plans, owners, and current status.
Risk Register
A list of questions that addresses traditional areas of uncertainty on a project.
Risk profile
A tool used to assess the impact of risks on a project.
Risk Severity Matrix
The easiest and most commonly used technique for analyzing risks.
Scenario Analysis
A contingency amount of time for an activity to cover uncertainty—for example, availability of a key resource or merge event.
Time buffer
Shifting responsibility for a risk to another party.
Transferring risk

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