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Question #31

The project director and project manager have met with the board and determined that the project has depleted the entire contingency reserve and has started eroding the profit margin. The project manager would like the risk manager to take full advantage of opportunities.

Which response should the risk manager take?

A . Mitigate
B . Accept
C . Transfer
D . Exploit

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Question #32

The project manager performed’ a variance analysis on the project during the execution phase. The

variances were shown as increasing

What does this result imply?

A . The uncertainty and risk are increasing.
B . The project schedule is lagging behind.
C . There is no potential for future deviation.
D . The project is over budget.

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Question #33

The risk manager conducted an updated Monte Carlo simulation for the project at the end of a phase. The simulation reveals a key activity is now on the critical path.

What recommendation should the risk manager make to the project manager?

A . Add more float to the key activity
B . Add more contingency to the project
C . Review the plans for the key activity
D . Increase the budget for the key activity

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Question #34

A project that was in the execution phase for the last six months was put on hold and was eventually cancelled after numerous scope related challenges. It was decided to re-plan the scope and divide the project into multiple projects to have better insight into end objectives. As part of the project start up. the project manager is developing the risk planning for the project.

What three artifacts should the project manager consult or review during this process? (Choose three.)

A . Project contracts
B . Lessons learned registers from analogous projects
C . Risk register
D . Risk management plan
E . Code of regulations

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Correct Answer: ABD
ABD

Explanation:

The project manager should consult or review project contracts, lessons learned registers from analogous projects, and the risk management plan to develop an effective risk planning for the project.

According to the PMBOK® Guide, the risk management plan is one of the key inputs for the plan risk management process, which is the first process in the project risk management knowledge area. The risk management plan describes how risk management activities will be structured and performed throughout the project. It includes information such as the methodology, roles and responsibilities, budget, timing, risk categories, definitions of risk probability and impact, probability and impact matrix, revised stakeholders’ risk tolerances, reporting formats, and tracking (page 409). Therefore, option D is the correct answer.

The project contracts are also an important input for the plan risk management process, as they may

contain terms and conditions that can create or affect various project risks. For example, contracts may include clauses related to penalties, incentives, warranties, intellectual property rights, termination, force majeure, arbitration, indemnification, etc. The project manager should review the project contracts to identify any potential sources of risk and plan appropriate responses (page 410). Therefore, option A is the correct answer.

The lessons learned registers from analogous projects are another valuable input for the plan risk management process, as they provide historical information and knowledge that can help the project manager identify and analyze risks, as well as plan risk responses. The lessons learned registers may contain information such as the risks that occurred, the root causes of the risks, the risk triggers, the effectiveness of the risk responses, the residual and secondary risks, the risk owners, the risk ratings, the risk trends, etc. The project manager should consult the lessons learned registers from similar or comparable projects to learn from past experiences and avoid repeating mistakes (page 411). Therefore, option B is the correct answer.

The risk register is not an input for the plan risk management process, but an output. The risk register is a document that contains the list of identified risks, their causes, potential responses, and other relevant information. The risk register is created during the identify risks process, which is the second process in the project risk management knowledge area. The risk register is then updated and refined throughout the project as more information becomes available and new risks emerge (page 414). Therefore, option C is incorrect.

The code of regulations is not an input for the plan risk management process, but a type of enterprise environmental factor. Enterprise environmental factors are the conditions, not under the control of the project team, that influence, constrain, or direct the project. The code of regulations refers to the rules and standards that govern the project’s industry, domain, or sector. The code of regulations may affect the project’s scope, schedule, cost, quality, resources, communications, procurement, and risk management. The project manager should consider the code of regulations when planning risk management activities, but it is not an artifact that needs to be reviewed or consulted (page 38). Therefore, option E is incorrect.

Reference: PMBOK® Guide, pages 38, 409-411, 4141

Question #35

A risk manager of a major project facilitates a meeting to develop the risk management plan .

What two factors does the risk manager need to consider to ensure an effective risk management plan is developed? (Choose two.)

A . Applying modern risk management techniques.
B . Aligning to project constraints and priorities.
C . Ensuring risk response strategies mitigate all risks.
D . Minimizing implementation costs.
E . Obtaining stakeholder acceptance

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Correct Answer: BE
BE

Explanation:

To ensure an effective risk management plan, the risk manager needs to consider aligning the plan to project constraints and priorities and obtaining stakeholder acceptance, as these factors will help ensure that the plan is relevant and supported by the project team and stakeholders.

According to the PMI-RMP Handbook, the risk management plan is a document that describes how risk management activities will be structured and performed on the project. It is one of the main outputs of the Plan Risk Management process. The risk management plan should consider the following factors to ensure its effectiveness:

Aligning to project constraints and priorities: The risk management plan should be aligned with the project objectives, scope, schedule, cost, quality, resources, and stakeholder expectations. It should also reflect the project’s risk appetite, tolerance, and threshold levels, which indicate the degree of uncertainty that the project can accept. The risk management plan should prioritize the risk management activities based on the project’s critical success factors and key performance indicators. Obtaining stakeholder acceptance: The risk management plan should be developed with the involvement and input of key stakeholders, such as the project sponsor, customer, team members, subject matter experts, and other relevant parties. The risk management plan should be communicated and approved by the stakeholders to ensure their commitment and support for the risk management process. The risk management plan should also define the roles and responsibilities of the stakeholders in risk management, as well as the reporting and escalation mechanisms.

The other options are not valid factors for ensuring an effective risk management plan: Applying modern risk management techniques: The risk management plan should apply the appropriate risk management techniques that suit the project’s context, complexity, and characteristics. The techniques should be based on the best practices and standards of the profession, such as the PMBOK® Guide and the Practice Standard for Project Risk Management. The techniques do not have to be modern or innovative, as long as they are effective and efficient. Ensuring risk response strategies mitigate all risks: The risk management plan should define the risk response strategies that will be used to address the identified risks. However, the risk response strategies do not have to mitigate all risks, as some risks may be accepted, transferred, or avoided. The risk response strategies should be based on the risk analysis and evaluation, which consider the probability and impact of the risks, as well as the cost and benefits of the responses.

Minimizing implementation costs: The risk management plan should consider the budget and resources available for the risk management activities. However, the risk management plan should not aim to minimize the implementation costs at the expense of the quality and effectiveness of the risk management process. The risk management plan should balance the costs and benefits of the risk management activities, and ensure that they provide value to the project.

Reference: PMI-RMP Handbook1, PMBOK® Guide2, Practice Standard for Project Risk Management2

Question #36

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

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Question #37

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

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Correct Answer: B
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) C 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

4 1. A budget change request was initiated by a functional manager in an organization due to a shortage in the functional manager’s department budget. The functional manager asks the CEO to approve utilization of a contingency budget reserved for one of the projects in its closing phase.

What should the risk manager of the related project have done to prevent this situation from happening?

Question #38

The project risk manager is in the process of identifying risks. The project sponsor has communicated that there is an influential stakeholder who has a senior management position. The other stakeholders do not feel comfortable speaking in front of this stakeholder .

What should the project risk manager do next to identify risks?

A . Review the risk breakdown structure to ensure project scope is covered.
B . Use the brainstorming technique to remove personal bias.
C . Use expert judgment to remove ego or emotional conflict.
D . Consider the Delphi technique to gather all stakeholder opinions.

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Question #39

A certain risk is identified for a major project, and the risk response is planned. However, the analysis reveals a high probability for a secondary risk which will be tolerated based on the organization’s risk thresholds. The secondary risk is subsequently registered. During project execution, the primary risk occurs, the planned action is taken, and the secondary risk emerges.

What two actions should the risk owner take? (Choose two.)

A . Implement the secondary risk response and update the project documents.
B . Conduct meeting with all stakeholder to agree on post impact solutions.
C . Set the corresponding trigger conditions to the secondary risk.
D . Engage the project manager to authorize the secondary risk’s response.
E . Update and communicate assessments of the secondary risk’s impact.

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Question #40

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.

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Correct Answer: D
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.

Reference: PMBOK® Guide1, Risk Management Professional (PMI-RMP) ® Cert Guide