Flash cards - 11. Risk management

Below are flash cards simulation questions on the chapter Project Risk management.
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1. What is Risk (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer: Uncertain event or condition that, if occurs has a positive or negative effect on one or more project objectives e.g. scope, schedule, cost & quality

2. What is difference between pure risk and business risk. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Pure risk = opportunity for loss only; Always a negative risk; e.g. natural calamity
Business risk =  opportunity for loss or gain

3. What is difference between known risk and unknown risk. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Known risk = we can anticipate and plan
Unknown risk = we can't anticipate and plan; take work around action - when this happens

4. Difference between risk and issue? (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:
Risk is uncertain event that might happen; Once risk identified, impact should be analyzed and response should be planned; Issue is the event that has already occurred. Once issue identified, it should be resolved or escalated; If risk is realized, it is called Issue

5. What is Secondary risk. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:
Secondary risks = caused by implementation of a response for other risk

6. What is Residual risk. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:
Residual risk = leftover risk after response is implemented.

7. What is difference between Risk appetite, Risk tolerance and Risk threshold. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Risk appetite	Risk tolerance (utility)	Risk threshold
how much uncertainty he can risk	how much risk he can withstand (also called utility function)	below this risk threshold only, he can take risk but not above
Expressed in high-level description	Expressed in measurable quantities	Expressed in measurable quantities
Risk appetite, Risk tolerance and Risk threshold apply to organization as well as stake holders	Risk appetite, Risk tolerance and Risk threshold apply to organization as well as stake holders	Risk appetite, Risk tolerance and Risk threshold apply to organization as well as stake holders
e.g. one investing in shares has more risk appetite than one doing Fixed deposits	e.g. same guy who invested in share can withstand max loss of 1 lakh but not more than that	e.g. same guy invests in stocks only that can give 40% loss or 40% profit. He won’t go for stocks/ Futures that can give 200% profit or 100% loss
e.g. Customer has slight risk appetite- he can withstand delay in schedule (expressed as description)	e.g. same customer willing to accept for schedule risk of 14 days	e.g. same customer’s risk threshold is 16 days or longer i.e. 16 days or longer NOT acceptable

8. What is Risk register (when created?). (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:
During identify risks and updated in all subsequent risk processes. Similarly stakeholder register created during identify stakeholder process and updated in all subsequent stakeholder process

9. What is Purpose of Qualitative Risk analysis?. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:
Prioritize and select the risks for for further detailed quantitative risk  analysis. 
Qualitative analysis= mandatory; 
Quantitative analysis = optional;

10. What is Probability and Impact matrix?. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

x-axis = probability of risk occurrence - low, medium-high; y-axis = impact if risk occurs - significant-moderate-minor;

11. What is Risk data quality assessment?. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Data used to do qualitative risk analysis- but how good is that data . 
How accurate is that data; This kind of analysis is called Risk data quality assessment.

12. What is Risk urgency assessment?. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

How soon/ how far is this risk happening.

13. What is Risk categorization. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

E.g. technical, external, organizational, project management

14. What is Risk Breakdown structure. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

• Lists categories and sub-categories of risks
• Grouping potential causes of risk e.g. Technical / Functional; Internal/ External
• Helps the project team to look at many sources from which project risk may arise

15. What is Risk prioritization number (risk score). (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

• RPN = p*I ; RPN high = most important risk
• p = probability = 0 to 1 - boundaries excluded; I = 1 to 10 - boundaries included

16. What is sensitivity analysis using tornado diagram. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:
It is special bar chart. looks like tornado as max value bar on top;

17. What is Modelling and Simulation using Monte Carlo ?. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

It is complex software; 
Monte Carlo = based on probability; indicates which outcome has max probability of happening;

18. What is Expected Monetary Value (EMV). (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

• EMV = ∑ (p*i);
• Statistical concept to calculate average outcome

19. What is Checklist analysis (as part of identify risks)?. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

• Risk identification checklists are developed based on historical information and knowledge
• The lowest level of the RBS can also be used as a risk checklist.
• Quick and simple. But team should explore for risks not present in checklist
• Checklists need to be reviewed periodically and during closure

20. What is SWOT analysis?. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Look at strengths and weakness of the projects to identify opportunities (positive risks) and threats ( negative risks)

21.  What is difference between Qualitative risk analysis vs Quantitative risk analysis. (To see the answer, pls highlight text by selecting it with mouse cursor).
Answer:

 QuaLitative = to prioritize risks by estimating the probability of the occurrence of a risk and its impact on the project= provides a List of quaLified risks
 Quantitative = to perform numerical analysis to estimate the effect of each identified risk on the overall project objectives
 Qualitative = mandatory; rapid and cost effective method; performed regularly throughout project 
 Quantitative = optional;

22. What are Strategies for negative risks or threats. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

avoid- mitigate- transfer - accept; avoid = may introduce secondary risks

23. What are Strategies for positive risks or opportunities. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

exploit - share - enhance - accept; exploit = make sure it happens; enhance = improve probability and/ or impact

24. What is Contingency Response Strategy. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Its a response for a predefined condition; Certain strategies designed to trigger only when certain things happen;

25. What is Risk re-assessment? (To see the answer, pls highlight text by selecting it with mouse cursor)

Answer:

Do it to identify - new risks, closing risks, status updates; do at least once a month;

26. What is Risk reserve analysis? (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Compare contingency reserve remaining vs amount of risk remaining; 

27. What is Murphy's law? (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

If a thing can go wrong, it will happen at worst time in worst possible scenario;

28. What is Workaround? (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Unplanned response to emerging risk unexpected

29. What is passive acceptance? (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Do nothing to plan for risk

30. What is active acceptance. (To see the answer, pls highlight text by selecting it with mouse cursor)
Answer:

Active acceptance = allocate reserves and formulate contingency plan