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Quiz Session - Attempts With Random Questions

PMI-RMP Exam Questions

Page 8 of 25

141.

You are a risk manager for a large company. Your manager has requested that you develop a hierarchical framework of potential sources of risk. Which of the following are you going to create?

  • Risk breakdown structure

  • Risk log

  • Risk document 

  • Risk response plan

Correct answer: Risk breakdown structure

The Risk Breakdown Structure (RBS) is a hierarchical framework that systematically organizes and categorizes potential sources of risk within a project or program. It serves as a roadmap for identifying and assessing specific risks within each category, facilitating a structured approach to risk identification and management. The RBS often serves as a foundation for other risk assessment techniques, such as brainstorming sessions, enhancing the comprehensiveness of risk management efforts.

A risk log is a document used to record and track identified risks throughout the project or program. It contains information about each risk, such as its description, likelihood, impact, status, and mitigation or response plans. While the risk log is an essential tool in risk management, it is not a hierarchical framework for organizing potential sources of risk.

Risk document is a broad term that can refer to any document related to risk management, such as the risk management plan, risk register, or other risk-related documentation. It does not specifically describe a hierarchical framework for potential sources of risk.

A risk response plan outlines the specific actions and strategies for addressing identified risks. It is not a hierarchical framework for categorizing and organizing potential sources of risk, as the RBS is designed to do.

142.

A company is undergoing a major merger with another firm. Before finalizing the deal, what should the risk management team prioritize?

  • Revisit the existing risk management plan and then perform a risk reassessment

  • Continue with the current risk assessment without any modifications

  • Delay the merger until all new risks are identified and assessed

  • Perform a new risk assessment without referring to the previous plan

Correct answer: Revisit the existing risk management plan and then perform a risk reassessment

Major organizational shifts may necessitate a review of risk management plans before reassessing risks.

Merely continuing with the current risk assessment does not take into account the new risks introduced by the merger.

Delaying the merger solely for risk identification might not be practical or beneficial for the organization.

Performing a new risk assessment without referencing the existing plan may overlook previously identified risks.

143.

In a financial institution, the risk manager has a position and expertise that gives them the power to make decisions about the allocation of resources to manage various financial risks, including credit risk and market risk. Which term best describes this power?

  • Authority

  • Responsibility

  • Accountability

  • Probability and impact

Correct answer: Authority

Authority, akin to responsibility, can be delegated and is the capacity to make decisions within predefined boundaries. Authority is a critical aspect of organizational structure and governance. It refers to the power or right vested in an individual or a position within an organization to make decisions, issue commands, and enforce actions. Authority comes in various forms, and its scope can vary widely depending on the organization's structure, culture, and policies.

Accountability refers to being answerable for actions or decisions.

Responsibility is similar to accountability but relates to accepting accountability for specific tasks or functions.

Probability is the likelihood of a risk occurring, and impact is the consequences of a risk.

144.

In a rapidly growing start-up, Sarah, the CEO, is concerned about the lack of structure in managing risks. She wants to establish a framework that not only articulates the company's objectives but also defines the parameters for effective risk management. Which term best describes this initiative?

  • Integrated approach

  • Risk governance

  • Risk threshold

  • Risk aversion

Correct answer: Integrated approach

An integrated approach to risk management is essential for defining the appropriate structure within an organization's governance and operations. It involves establishing a framework that enables the organization to articulate its objectives, define both external and internal parameters for effective risk management, and set risk criteria for various processes. This framework is dynamic and evolves through iterative activities.

Risk governance is the set of processes and structures for overseeing and managing risks.

Risk threshold is the measure of acceptable variation in an objective.

Risk aversion is a reluctance to take on risk.

145.

A project manager is tasked with developing a scope statement for a marketing campaign. What part of the project's scope statement should be the primary focus for identifying potential risks?

  • The specifications and delivery methods for campaign objectives.

  • The project's budget and financial resources.

  • The project's timeline and critical milestones.

  • The project's target audience and market segment.

Correct answer: The specifications and delivery methods for campaign objectives.

Project scope statements introduce several risks, predominantly associated with the specifications and delivery methods for products, services, or other expected outcomes within the project's defined scope.

The project's budget and financial resources are significant but are not part of the scope statement and do not introduce risks. 

The project's timeline and milestones are important for planning but are not typically part of the scope statement that introduces risks. 

The target audience and market segment are essential for the campaign but are not typically part of the scope statement and do not introduce risks.

146.

An organization is about to transition its operations from a physical office space to a fully remote setup. What's the best approach for the risk management team?

  • Review and potentially modify the current risk management plan, followed by a risk reassessment

  • Keep the current risk management plan as it covers all potential risks

  • Seek external consultants to conduct a fresh risk assessment

  • Disregard the existing plan and start from scratch

Correct answer: Review and potentially modify the current risk management plan, followed by a risk reassessment

Major organizational shifts may necessitate a review of risk management plans before reassessing risks.

The current plan might not encompass the unique risks associated with a fully remote operation.

While external consultation can be valuable, it's not the first step. The internal team should revisit the existing plan first.

Completely discarding the existing plan might lead to missing out on addressing known risks.

147.

Jorge is a project manager responsible for a large infrastructure development project. He wants to identify potential risks and opportunities that may impact the project's success. What technique should he use to provide a strategic overview of these factors?

  • SWOT analysis

  • Risk breakdown structure (RBS)

  • Project assumption register

  • Cause-and-effect fishbone diagram

Correct answer: SWOT analysis

SWOT analysis is a valuable technique for identifying project risks and opportunities that is often used to support strategic planning. It is particularly adept at addressing higher-level risks, making it somewhat less suited for detailed risk assessment but highly effective for identifying project opportunities.

RBS is more suited for detailed risk analysis and categorization. 

A project assumption register focuses on documenting assumptions but does not provide a strategic overview of risks and opportunities. 

Cause-and-effect fishbone diagrams help structure risk identification but may not emphasize higher-level risks and opportunities as effectively as SWOT analysis.

148.

The project manager is reviewing the variance analysis report, and they notice that variances have been increasing over the past few weeks. What do these increasing variances typically indicate?

  • Higher uncertainty and risk

  • Reduced uncertainty and risk

  • Successful risk response implementation

  • Unrelated effects on project objectives

Correct answer: Higher uncertainty and risk

Variance analysis compares planned results to actual results. Increasing variances indicate higher uncertainty and risk. The findings from this analysis can help forecast potential deviations from the baseline plan before completion.

Reduced uncertainty and risk indicate the opposite: lower uncertainty and risk. 

Successful risk response implementation typically leads to reduced variances.

Unrelated effects on project objectives are not typical outcomes indicated by increasing variances.

149.

A tech firm wants to develop a mobile application with a payment gateway feature but lacks the in-house expertise to ensure the highest security standards for payment processing. What's the best strategy to transfer the risk associated with potential security breaches?

  • Partner with a third-party payment-processing provider known for its security standards and experience

  • Develop the payment feature and then hire an external auditor to review its security

  • Conduct extensive research and train the in-house team on payment security standards

  • Release the application without the payment feature and add it in later versions

Correct answer: Partner with a third-party payment-processing provider known for its security standards and experience

Transfer Risk Strategy revolves around shifting the burden of a particular risk from the primary organization to a third party, such as a supplier or a business partner. The idea is to delegate the responsibility of managing the risk to an entity that's better equipped or has more experience in handling that specific risk. For the strategy to be effective, the third party should not only have the required skills and resources but also the willingness to commit fully to managing the risk. 

Auditing after development doesn't transfer the risk; it just identifies potential vulnerabilities. 

Training the in-house team doesn't transfer the risk but attempts to build internal expertise to handle it. 

Delaying the feature doesn't transfer the risk; it just postpones addressing it.

150.

A project is nearing its completion, and all previously identified risks have been successfully mitigated. However, the project manager is concerned about potential unidentified risks that might still be present. Which of the following should the project manager do?

  • Conduct a risk review session to identify and address any residual risks

  • Declare the project risk-free and proceed to closure

  • Re-open the risk identification phase and start from scratch

  • Seek feedback from team members about any potential overlooked risks

Correct answer: Conduct a risk review session to identify and address any residual risks

Effective risk management necessitates the identification of both the probability and impact of risks. Probability represents the likelihood of a risk event occurring, with values ranging from slightly above 0% to just below 100%. Impact refers to the potential consequences of risks, which can be either positive or negative for the organization. The significance of the impact can have various implications and influences on the organization.

No project can be declared entirely risk-free.

Re-opening the risk identification phase might not be practical or efficient at this stage.

While feedback is valuable, it might not be comprehensive enough.

151.

As a program manager, you are responsible for monitoring program-level risks. Which of the following activities is classified as a tactical aspect of risk monitoring?

  • Overseeing the execution of proactive and reactive actions taken to address identified risks

  • Assessing the evolving risk profiles of individual program components

  • Reviewing the impact of changes in the program's risk landscape on business benefits

  • Analyzing the overall program risk landscape

Correct answer: Overseeing the execution of proactive and reactive actions taken to address identified risks

Monitoring program-level risks involves both tactical and strategic activities. The tactical aspect oversees the execution of proactive and reactive actions taken to address identified risks. The strategic aspect deals with assessing the evolving risk profiles of individual program components, the overall program risk landscape, and the impact of these changes on the intended business benefits or organizational capabilities.

Assessing risk profiles, reviewing the impact of changes on business benefits, and analyzing the overall program risk landscape are strategic activities.

152.

A project team is managing a high-profile project with several identified risks. One of the risks associated with a key supply chain component has a specific trigger condition if the lead time for component delivery exceeds 10 days. The risk owner notices that the lead time is currently at 9 days and trending upward. What should be the next step for the risk owner?

  • Initiate discussions with alternative suppliers while continuing to monitor the lead time closely

  • Wait until the lead time reaches 10 days before taking any action

  • Increase the frequency of monitoring the lead time but take no other action until 10 days have passed

  • Inform the project manager and suggest looking for alternative suppliers immediately

Correct answer: Initiate discussions with alternative suppliers while continuing to monitor the lead time closely

Specified trigger conditions correspond to each defined risk response. Risk owners must monitor these conditions and ensure prompt action is taken when necessary.

Waiting passively for the trigger condition to be met could result in delays and a lack of preparedness to respond effectively. 

While increasing the frequency of monitoring is proactive, it is not sufficient on its own without preparing for potential actions. 

Although informing the project manager is a good practice, suggesting immediate action without adequate monitoring and analysis of trends might be premature.

153.

A financial analyst is evaluating the potential risk of investing in a volatile market. The analyst is assessing the likelihood of a market downturn (probability) and the financial loss it could cause (impact). Which of the following terms best describes what the financial analyst is evaluating?

  • Probability and impact

  • Accountability

  • Responsiblity

  • Authority

Correct answer: Probability and impact

Effective risk management necessitates the identification of both the probability and impact of risks. Probability represents the likelihood of a risk event occurring, with values ranging from slightly above 0% to just below 100%. Impact refers to the potential consequences of risks, which can be either positive or negative for the organization. The impact can have various implications and influences on the organization.

Accountability is the obligation to answer for actions or decisions, which is not the primary concern of a financial analyst evaluating risk.

Responsibility is similar to accountability but pertains to specific tasks or functions.

Authority is decision-making power within an organization.

154.

James is leading a team in identifying risks for an upcoming software development project. He needs a technique that can assist in strategic planning and highlight higher-level risks. What method should James employ?

  • SWOT analysis

  • Root cause analysis

  • Checklists

  • Cause-and-effect fishbone diagrams

Correct answer: SWOT analysis

SWOT analysis is a valuable technique for identifying project risks and opportunities, often used to support strategic planning. It is particularly adept at addressing higher-level risks, making it somewhat less suited for detailed risk assessment but highly effective for identifying project opportunities.

Root cause analysis is focused on identifying the underlying causes of issues and not specifically on strategic planning. 

Checklists help ensure comprehensive risk assessment but do not provide a strategic overview. 

Cause-and-effect fishbone diagrams are useful for structuring risk identification but may not highlight higher-level risks.

155.

You are asked to provide an influence diagram to give a visual representation of a current situation. Which of the following is true about influence diagrams? 

  • When integrated with sensitivity analysis or Monte Carlo simulation, influence diagrams become valuable tools for pinpointing risks and uncovering their origins

  • When integrated with sensitivity analysis or Monte Carlo simulation, influence diagrams become obsolete tools with no relevance to risks and their origins

  • When integrated with sensitivity analysis or Monte Carlo simulation, influence diagrams become biased tools for exaggerating risks and misrepresenting their origins

  • When integrated with sensitivity analysis or Monte Carlo simulation, influence diagrams become detrimental tools for obscuring project performance

Correct answer: When integrated with sensitivity analysis or Monte Carlo simulation, influence diagrams become valuable tools for pinpointing risks and uncovering their origins

Influence diagrams provide a visual representation of a situation, depicting key entities, decision points, uncertainties, and outcomes while illustrating the relationships (influences) among them. When integrated with sensitivity analysis or Monte Carlo simulation, influence diagrams become valuable tools for pinpointing risks and uncovering their origins.

Integrating influence diagrams with sensitivity analysis or Monte Carlo simulation does not make them obsolete. In fact, it enhances their relevance and usefulness. These analytical techniques are often used together to provide a more comprehensive understanding of risks and their origins. Influence diagrams are not inherently biased.

156.

In a large construction project, the risk management team wants to explore potential unknown risk types using advanced techniques. They plan to use artificial intelligence and big data for analysis. What type of data analytics is being considered in this scenario?

  • Advanced data analytics

  • Direct data analytics

  • Basic data analytics

  • Predefined data analytics

Correct answer: Advanced data analytics

Data analytics involves examining known risk types by analyzing relevant documentation and data to determine their applicability to a specific portfolio, program, or project. In direct data analytics, the predefined question and risk types, as well as the relationships between different risk types and their causes and effects, are explored. The use of big data, advanced analytics, or artificial intelligence to investigate unknown risk types represents advanced data analytics.

Direct data analytics and predefined data analytics do not specifically address the advanced techniques mentioned in the scenario. Basic data analytics is also not the most accurate term for this advanced approach.

157.

A city council sees an opportunity to convert a dilapidated area into a public park. They believe the park can be more than just a green space. Which of the following actions aligns best with the Enhance Opportunity Strategy?

  • Collaborate with landscape architects, local artists, and the community to design a multifunctional space with art installations, activity zones, and eco-friendly features, aiming to make it a landmark attraction in the city

  • Clean the area and plant some trees and grass

  • Hold a small survey in the neighborhood to ask what basic amenities they would like

  • Convert the area into a park, leaving some areas vacant for future development

Correct answer: Collaborate with landscape architects, local artists, and the community to design a multifunctional space with art installations, activity zones, and eco-friendly features, aiming to make it a landmark attraction in the city

This strategy focuses on optimizing and amplifying potential positive outcomes for the project. It's the counterpart to risk mitigation. Instead of reducing negative impacts, the emphasis here is on maximizing positive outcomes, ensuring the project doesn't just meet but exceeds its objectives.

Simply cleaning and planting would not exploit the full potential of the opportunity. 

A small survey might bring some insights but won't truly amplify the park's potential. 

Leaving areas vacant for future development is a passive approach.

158.

In an airline company, James, the chief operating officer, is embarking on a major expansion plan, including adding new routes and acquiring additional aircraft. He recognizes the importance of formulating a robust risk management strategy. He aims to determine how risk management processes will be carried out and integrated into broader growth initiatives. Which of the following best describes the reason for his actions? 

  • Purpose of risk management planning

  • Risk aversion

  • Risk threshold

  • Risk alignment

Correct answer: Purpose of risk management planning

The purpose of the risk management planning process is threefold: to formulate an overarching risk management strategy, to determine how risk management processes will be carried out, and to integrate risk management seamlessly with all other organizational activities. The risk management plan specifies both the standard frequency for repeating processes and the circumstances under which specific actions are initiated. These risk management activities are incorporated into the portfolio, program, or project management plan.

Risk alignment is not a standard term in risk management.

Risk threshold is the measure of acceptable variation in an objective.

Risk aversion is a reluctance to take on risk.

159.

A manufacturing company is about to source raw materials from a region known for unpredictable weather conditions that can cause delivery delays. Which of the following is the best approach to transferring the associated risks?

  • Engage a local supplier with experience in managing weather-related risks to handle sourcing and deliveries

  • Set up an in-house team to predict weather patterns and adjust delivery schedules

  • Pre-purchase all raw materials upfront to avoid future delays

  • Continue with the plan and maintain an inventory buffer for potential delays

Correct answer: Engage a local supplier with experience in managing weather-related risks to handle sourcing and deliveries

Transfer Risk Strategy revolves around shifting the burden of a particular risk from the primary organization to a third party, such as a supplier or a business partner. The idea is to delegate the responsibility of managing the risk to an entity that's better equipped or has more experience in handling that specific risk. For the strategy to be effective, the third party should not only have the required skills and resources but also the willingness to commit fully to managing the risk.

While maintaining an inventory buffer can help mitigate the effect of delays, it doesn't transfer the risk.

Setting up an in-house team can help manage the situation, but it still keeps the risk within the organization. 

Pre-purchasing doesn't transfer the risk; it just alters the timing of procurement.

160.

A project manager is nearing the completion of a project phase and begins the process of closing. The manager must ensure all risks are adequately addressed before moving on. What should be the primary focus at this stage?

  • Gathering insights on addressed and remaining risks for future phases or projects.

  • Focusing exclusively on high-impact risks that remain.

  • Transferring all remaining risks to the next phase of the project.

  • Ignoring residual risks as the phase is nearly complete.

Correct answer: Gathering insights on addressed and remaining risks for future phases or projects.

Closing processes wrap up projects, phases, or contracts. In terms of risk management, it's crucial to gather insights for future phases or projects and address remaining risks before closure.

While high-impact risks are important, the manager should not ignore other risks, including those of lower impact, as they could become relevant in future phases.

Not all risks can or should be transferred to the next phase. Some risks might need to be mitigated or closed within the current phase. 

Ignoring residual risks can lead to unforeseen issues in later stages or projects. All risks should be evaluated and addressed appropriately.

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