question

Project risk management is the ____ and _______ of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives

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art, science

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Risk management is often overlooked in projects, but it can help improve ____________ by helping select good projects, determining project scope, and developing realistic estimates.

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project success

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Risk has the _______ maturity rating of all knowledge areas.

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lowest

question

the possibility of loss or injury

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risk

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involves understanding potential problems that might occur in the project and how they might impede project success; like a form of insurance, it is an investment

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negative risk

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risks that result in good things happening; sometimes called opportunities

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positive risks

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an uncertainty that can have a negative or positive effect on meeting project objectives

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project risk

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The goal of project risk management is to ___________ potential negative risks while maximizing potential positive risks.

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minimize

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the degree of uncertainty an entity is willing to take on, in anticipation of a reward

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risk appetite

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the amount of satisfaction or pleasure received from a potential payoff

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risk utility/risk tolerance

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Utility ________ at a decreasing rate for people who are risk-averse.

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rises

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those who have a higher tolerance for risk, and their satisfaction increases when more payoff is at stake

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risk-seeking

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achieves a balance betweens risk and payoff

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risk-neutral

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sometimes used to describe risks that the project team has identified and analyzed

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known risks

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risks that have not been identified and analyzed

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unknown risks

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Deciding how to approach and plan the risk management activities for the project

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planning risk management

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Determining which risks are likely to affect a project and documenting the characteristics of each

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identifying risks

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Prioritizing risks based on their probability and impact of occurrence

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performing qualitative risk analysis

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Numerically estimating the effects of risks on project objectives

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performing quantitative risk analysis

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Taking steps to enhance opportunities and reduce threats to meeting project objectives

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planning risk responses

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Monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project

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controlling risk

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a plan that documents the procedures for managing risk throughout a project

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risk management plan

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The __________ should review project documents and understand the organization's and the sponsor's approaches to risk.

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project team

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The level of detail of the risk management plan ____________.

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varies with the needs of the project

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-Methodology -Roles and responsibilities -Budget and schedule -Risk categories -Risk probability and impact -Revised stakeholders' tolerances -Tracking -Risk documentation

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Topics addressed in a risk management plan

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predefined actions that the project team will take if an identified risk event occurs

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contingency plans

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developed for risks that have a high impact on meeting project objectives, and are put into effect if attempts to reduce the risk are not effective

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fallback plans

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provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level

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contingency reserves (allowances)

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funds held for unknown risks

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management reserves

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-Market risk -Financial risk -Technology risk -People risk -Structure/process risk

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broad categories of risk

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projects that have significant cost or schedule overruns

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runaway projects

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a hierarchy of potential risk categories for a project; similar to work breakdown structure but used to identify and categorize risks

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risk breakdown structure

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the process of understanding what potential events might hurt or enhance a particular project

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identifying risks

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a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment

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brainstorming

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used to derive a consensus among a panel of experts who make predictions about future developments

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delphi technique

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The delphi technique uses ______________ and written responses and avoids the biasing effects possible in oral methods, such as brainstorming.

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repeated rounds of questioning

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a fact-finding technique for collecting information in face-to-face, phone, e-mail, or instant-messaging discussions

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interviewing

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diagrams that show how different parts of a system interrelate

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flowcharts

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represents decision problems by displaying essential elements, including decisions, uncertainties, causality, and objectives and how they influence each other

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influence diagram

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helps identify the broad negative and positive risks that apply to a project

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SWOT analysis

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The ____________ of the risk identification process is a list of identified risks and other information needed to begin creating a risk register.

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main output

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A document that contains the results of various risk management processes and that is often displayed in a table or spreadsheet format; A tool for documenting potential risk events and related information

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risk register

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refer to specific, uncertain events that may occur to the detriment or enhancement of the project

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risk events

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-An identification number for each risk event -A rank for each risk event -The name of each risk event -A description of each risk event -The category under which each risk event falls -The root cause of each risk - Triggers for each risk -Potential responses to each risk -The risk owner or person who will own or take responsibility for each risk -The probability and impact of each risk occurring. -The status of each risk

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risk register contents

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indicators or symptoms of actual risk events

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triggers

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person who will own or take responsibility for each risk

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risk owner

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Assess the likelihood and impact of identified risks to determine their magnitude and priority

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performing qualitative risk analysis

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- probability/impact matrixes - the top ten risk item tracking - expert judgment

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risk quantification tools and techniques

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lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other; List the risks and then label each one as high, medium, or low in terms of its probability of occurrence and its impact if it did occur

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probability/impact matrix or chart

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Numbers that represent the overall risk of specific events based on their probability of occurring and the consequences to the project if they do occur

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risk factors

question

a qualitative risk analysis tool that helps to identify risks and maintain an awareness of risks throughout the life of a project; Establish a periodic review of the top ten project risk items; List the current ranking, previous ranking, number of times the risk appears on the list over a period of time, and a summary of progress made in resolving the risk item

answer

top ten risk item tracking

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a list of risks that are low priority, but are still identified as potential risks

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watch list

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Often follows qualitative risk analysis, but both can be done together; Large, complex projects involving leading edge technologies often require extensive quantitative risk analysis

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performing quantitative risk analysis

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- Decision tree analysis - Simulation - Sensitive analysis

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main techniques of quantitative risk analysis

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a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain

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decision tree

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the product of a risk event probability and the risk event's monetary value

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estimated monetary value (EMV)

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uses a representation or model of a system to analyze the expected behavior or performance of the system

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simulation

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simulates a model's outcome many times to provide a statistical distribution of the calculated results

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monte carlo analysis

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To use a Monte Carlo simulation, you must have __________ (most likely, pessimistic, and optimistic) plus an estimate of the likelihood of the estimate being between the most likely and optimistic values.

answer

three estiamtes

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1. Assess the range for the variables being considered 2. Determine the probability distribution of each variable 3. For each variable, select a random value based on the probability distribution 4. Run a deterministic analysis or one pass through the model 5. Repeat steps 3 and 4 many times to obtain the probability distribution of the model's results

answer

steps of a monte carlo analysis

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a technique used to show the effects of changing one or more variables on an outcome

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sensitivity analysis

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After identifying and quantifying risks, you must decide __________.

answer

how to respond to them

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- Risk avoidance - Risk acceptance - Risk transference - Risk mitigation

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four main response strategies for negative risks

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eliminating a specific threat, usually by eliminating its causes

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risk avoidance

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accepting the consequences if a risk occurs

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risk acceptance

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shifting the consequence of a risk and responsibility for its management to a third party

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risk transference

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reducing the impact of a risk event by reducing the probability of its occurence

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risk mitigation

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- Risk exploitation - Risk sharing - Risk enhancement - Risk acceptance

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response strategies for positive risks

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doing whatever you can to make sure the positive risk happens

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risk exploitation

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allocating ownership of the risk to another party

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risk sharing

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changing the size of the opportunity by identifying and maximizing key drivers of the positive risk

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risk enhancement

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also applies to positive risks when the project team does not take any actions toward a risk

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risk acceptance

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risks that remain after all of the response strategies have been implemented

answer

residual risks

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a direct result of implementing a risk response

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secondary risks

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Involves executing the risk management process to respond to risk events and ensuring that risk awareness is an ongoing activity performed by the entire project team throughout the entire project

answer

controlling risks

question

unplanned responses to risk events that must be done when there are no contingency plans

answer

workarounds

question

- Work performance information - change requests - updates to the project management plan, other project documents, and organizational process assets

answer

main outputs of risk control

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