Project Risk Management

Sample Questions

1 Which of the following processes is not part of Project Risk Management?

A. Qualitative Risk Analysis
B. Risk Identification
C. Risk Analysis
D. Risk Response Planning

2. Using the PMBOK® Guide definition of contingency reserve, which of the following
statements about contingency reserves is false?
A. A contingency reserve is a separately planned quantity of money or time that has been
set aside to allow for future situations which may be planned for only in part.
B. Contingency reserves are used to reduce the risks of overruns of project objectives to
a level acceptable to the organization.
C. Contingency reserves may be set aside for known risks.
D. Contingency reserves can be included in the project’s cost and schedule estimates
without any identifying documentation.

3. Which of the following is not a tool or technique used during the Quantitative Risk Analysis
process?
A. Earned value analysis
B. Interviewing
C. Decision Trees
D. Sensitivity Analysis

4. Which of the following statements regarding pure risk is false?

A. The risk can be deflected or transferred to another party through a contract or
insurance policy. Also referred to as insurable risk.
B. Pure risks involve the chance of both a profit and a loss.
C. No opportunities are associated with pure risk, only threats.
D. Pure risk could be classified as a known-unknown risk.

5. A contingency plan is:

A. A planned response that defines the steps to be taken if an identified risk event should
occur.
B. A workaround
C. A comprehensive listing of many possible risks that might occur on a project.
D. a and b

6. The inherent chances for both profit or loss associated with a particular endeavor is called:
A. Favorable risk
B. Opportunity risk
C. Pure risk
D. Business risk

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Sample Questions, continued

7. A risk response which involves eliminating a threat is called:

A. Mitigation
B. Deflection
C. Avoidance
D. Transfer

8. Deflection or transfer of a risk to another party is part of which of the following risk
response categories?
A. Mitigation
B. Acceptance
C. Avoidance
D. Transference

9. When should risk identification be performed? (select best answer)

A. During Concept Phase
B. During Development Phase
C. During Implementation Phase
D. Risk identification should be performed on a regular basis throughout the project.

10. Which of the following statements is false?

A. Uncertainty and risk are greatest at the start of the project and lowest at the end.
B. The amount at stake is lowest at the end of the project and greatest at the start.
C. Analysis of risks using probability and consequences helps identify those risks that
should be managed aggressively.
D. Opportunities are positive outcomes of risk.

11. A contingency plan is executed when:

A. A risk is identified.
B. An identified risk event occurs.
C. When a workaround is needed.
D. All of the above

12. A risk probability or impact scale that uses rank-ordered values such as very low, low,
moderate, high, and very high is called:
A. An ordinal scale
B. A cardinal scale
C. A nonlinear scale
D. All of the above

13. Organizations that desire very much to avoid high-impact risks may use which of the
following techniques during qualitative risk analysis? Choose the best answer.
A. Avoidance
B. Data precision ranking with low precision
C. A probability-impact risk rating matrix using nonlinear scales
D. The organization would not use any techniques

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Sample Questions, continued

14. What is the Delphi technique as it relates to the risk identification process?
A. An information-gathering technique where experts perform a Strengths, Weaknesses,
Opportunities, Threats (SWOT) analysis.
B. An information-gathering technique where experts are briefed about the project and
then interviewed for their opinions.
C. An information-gathering technique where experts meet and generate ideas about
project risk.
D. An information-gathering technique where experts participate anonymously and ideas
about project risk are gathered via a circulated questionnaire.

15. Which of the following are considered tools and techniques for qualitative risk analysis?
A. Risk probability and impact, probability-impact risk rating matrix, and data precision
ranking
B. Interviewing, sensitivity analysis, decision tree analysis, and simulation
C. Avoidance, transference, mitigation, and acceptance
D. Checklists, sensitivity analysis, and simulation

16. A contingency plan has a 20% chance of failing. The corresponding risk event has a 30%
chance of occurring. What’s the probability for the risk to occur AND the contingency plan
to fail?
A. 50%
B. 25%
C. 6%
D. 10%

17. The independence of two events in which the occurrence of one is not related to the
occurrence of the other is called:
A. Event phenomenon
B. Independent probability
C. Statistical independence
D. Statistical probability

18. Which of the following documents is primarily used as an input into the Risk Identification
Process?
A. Risk Management Plan
B. WBS
C. Scope Statement
D. Contingency Plan

Risks are accepted when:

A. The project team decides to transfer the risk to a third party.
B. The project team decides not to change the project plan to deal with a risk or is unable
to identify any other suitable response strategy.
C. The project team reduces the probability and consequences of an adverse risk event
to an acceptable threshold.
D. Risks are never accepted.

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Sample Questions, continued

20. The amount of money or time needed above the estimate to reduce the risk of overruns of
project objectives to a level acceptable to the organization is usually called the:
A. Executive reserve
B. Project manager slush fund
C. Contingency reserve
D. Mitigation buffer

21. By using Project Risk Management techniques, project managers can develop strategies
that do all but which of the following:
A. Significantly reduce project risks
B. Eliminate project risks
C. Provide a basis for better decision making on overruns
D. Identify risk, their impact(s) and any appropriate responses

22. In the following network, all three tasks, A, B and C, each have a duration 5 days. The
value ‘p’ indicates the probability of each task finishing on schedule. If all 3 tasks start on
day 1, what is the probability that all 3 tasks will finish in 5 days?
A. p = .4
B. p = .003
C. p = .014
D. Probability cannot be determined from the data given

Task A
p=0.1

Task B p=0.2
1 2
Task C p=0.15

23. A risk event is defined as :

A. The severity of the consequences of a loss
B. How likely the event is to occur
C. A discrete occurrence that may affect the project for better or worse
D. A symptom of a risk

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Project Risk Management

Sample Questions, continued

24. An analysis has identified four different options for reducing project costs. Given the
following decision tree, which option should be selected ?

P=0.7
Option A value $100
P=0.1 Option B value $1,000
P=0.4
P=0.2 Option C value $ 5,000

P=0.6 Option D value $ 2,000

A. Option A
B. Option B
C. Option C
D. Option D

25. Risk avoidance involves:

A. Accepting the consequences
B. Developing a contingency plan
C. Eliminating a specific threat, usually by eliminating the cause
D. Reducing the effect of the risk event by reducing the probability of the occurrence

26. Examples of probability distributions used in quantitative risk analysis are:

A. Six-sigma distributions
B. Probability-impact matrix distributions
C. Delphi distributions
D. Beta and triangular distributions

27. When developing a risk response plan, which risks should you focus on first? Choose the
best answer.
A. Near term risks with a high probability of occurrence
B. High impact risks with a low probability of occurrence
C. Risks with a high risk score
D. a and c

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 Project Risk Management

Sample Questions, continued

28. Warning signs that indicate a risk has occurred or is about to occur are called:
A. Risks
B. Triggers
C. Sign posts
D. Stop gaps

29. What is risk event probability? Choose the best answer.

A. The value used in mitigation and deflection
B. An estimate of the probability that a given risk event will occur
C. The probability of the risk not occurring at this time
D. An estimate of the probability that an uncontrollable event will occur

30. A project of $1.5 million has an adverse event that has a probability of 0.07 of occurring
and a potential loss of $15,000. This represents an expected negative monetary value of
how much?
A. $100,500
B. $105
C. $1,050
D. $15,000

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Project Risk Management

Answer Sheet

1. a b c d 16. a b c d

2. a b c d 17. a b c d

3. a b c d 18. a b c d

4. a b c d 19. a b c d

5. a b c d 20. a b c d

6. a b c d 21. a b c d

7. a b c d 22. a b c d

8. a b c d 23. a b c d

9. a b c d 24. a b c d

10. a b c d 25. a b c d

11. a b c d 26. a b c d

12. a b c d 27. a b c d

13. a b c d 28. a b c d

14. a b c d 29. a b c d

15. a b c d 30. a b c d

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 Project Risk Management

Answers
®
1 C PMBOK Guide, pg. 127
2 D PMBOK® Guide, Glossary and pg. 143, pg. 73
3 A PMBOK® Guide, pg. 128 Earned value analysis is used as part of Risk
Monitoring and Control
4 B Project & Program Risk Management by R. Max Wideman, Editor
5 A A workaround is an unplanned response to a negative risk event. Option C is
the definition of a checklist.
6 D Project & Program Risk Management by R. Max Wideman, Editor. glossary
7 C PMBOK® Guide, pg. 142
8 D PMBOK® Guide, pg. 142
9 D PMBOK® Guide, pg. 131
10 B
11 B PMBOK® Guide, glossary
12 A PMBOK® Guide, pg. 135
13 C PMBOK® Guide, pgs. 134-136. A nonlinear scale can provide a greater risk
score for risks with high impacts and probabilities. This allows the organization
with high-impact risk aversion to better rank and focus on these risks. The use
of data with low precision as suggested in Option B may lead to qualitative risk
analysis of little use to the project manager. Option A is a type of risk response.
14 D PMBOK® Guide, pgs. 132-133
15 A PMBOK® Guide, pg. 128
16 C 0.2 x 0.3 = 0.06, Project & Program Risk Management by R. Max Wideman,
Editor, decision tree analysis
17 C
18 A PMBOK® Guide, pg. 128.
19 B PMBOK® Guide, pg. 143. Option A is transference; Option C is mitigation.
20 C PMBOK® Guide, pg. glossary
21 B Risks can never be completely eliminated on a project.
22 B 0.1 x .2 x .15 = .003
23 C PMBOK® Guide, glossary
24 D a. Option A Expected value of Opportunity = (.4)(.7)($100) = $ 28
c. Option B Expected value of Opportunity = (.4)(.1)($1000) = $ 40
b. Option C Expected value of Opportunity = (.4)(.2)($5000) = $ 400
d. Option D Expected value of Opportunity = (.6)($2000) = $1200
25 C PMBOK® Guide, pg. 142
26 D PMBOK® Guide, pg. 140
27 D
28 B PMBOK® Guide, pg. 133
29 B PMBOK® Guide, pg. 134, Wideman pg. VII-2
30 C $15,000 x .07 = $1,050

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Project Risk Management

PMP® Certification Exam Preparation

What did I do wrong ?

I would have answered a larger number of questions Number

correctly if I had ___________.

1. Read the question properly and identified the keywords _________

2. Read the answer properly and identified the keywords _________

3. Read ALL the answers before answering the question _________

4. Used a strategy of elimination _________

5. Known the formula _________

6. Known the PMBOK® definition _________

7. Checked the mathematics _________

8 Used the PMI® rather than my own perspective _________

9. Reviewed my answer after reading the other questions _________

10. NOT rushed to finish _________

Total _________

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