PMI-SH Assess and Manage Risks

A project manager calls a meeting to identify risks for a complicated project. Several subject matter experts are invited to this meeting along with the project team.

Why has the project manager invited the subject matter experts?

• Subject matter experts have specialized expertise and can help identify and address high-risk issues.

• Identifying risks in a meeting with subject matter experts makes getting better project resources easier.

• Risks will be easier to accept if the subject matter experts who attended the meeting work together.

• The project manager can leverage subject matter experts' resources to follow up on the identified risks.

Answer explanation

A. Subject matter experts have specialized expertise and can help identify and address high-risk issues.
Subject matter experts are invited to the meeting because they provide functional expertise that will help to quickly identify high-risk areas. Expert judgment is the contribution provided to risk identification based on expertise in a subject area, industry segment, organizational processes, etc.
The other answer choices are incorrect because the meeting was called to identify risks, not what may happen after the risk has been identified. When subject matter experts assist in identifying risks, they do not typically provide resources beyond their expertise. The participation of subject matter experts does not necessarily make risks easier to accept nor does it ensure that better resources will be secured.

The opening of a new overseas office faces potential delays as the required permit has not yet been issued by the local government. The project team met to evaluate the appropriate course of action as outlined in the risk register. After a thorough assessment, the team decided to postpone the opening to another date.

Which document should the project manager use to update the project management plan?

• Risk management plan

• 1. Risk report

• Risk register

• Lessons learned register

Answer explanation

In this scenario, the team identified a risk related to the delay in obtaining the necessary permit, which was already included in the risk register. The team assessed the response to take, which was to postpone the opening to another date. Therefore, the project manager should update the risk register to reflect the new status of the risk and update the project management plan accordingly. 

The other options are incorrect.

The risk management plan describes how risk management activities will be structured and performed.

A risk report summarizes information on individual project risks and the level of overall project risk.

A lessons learned register records knowledge gained during a project but is not intended for documenting real-time risk management decisions.

During an important project, one of the contractors complains that the approval process is difficult to handle and may delay the project schedule.

What should the project manager do first?

• Hire additional resources for the team to mitigate this risk.

• Discuss with the team to find options to mitigate the risk.

• 1. C.Escalate the risk to upper management as critical for timely delivery.

• Add the risk to the risk register to be monitored and reviewed.

Answer explanation

The project manager should immediately record the risk in the risk register.

After that, the project manager can discuss with the team to determine solutions to mitigate the risk. 

Hiring additional resources for the team could potentially increase the project cost, and escalating the risk to  upper management should be done only after the project manager and team fail to find a mitigating solution.

During the development phase of a construction project, key stakeholders approved a project budget. The team identified risks and appropriate risk responses. However, during project execution, an unexpected local health emergency halted and delayed work on the project. This event type was not identified as a risk or listed in the risk register. The team decides that this issue must be mitigated, which would incur additional costs. 
How should the project manager address this unforeseen budgetary overrun?

• Use the management reserve to cover the cost.

• Identify potential ways to exploit the risk.

• Use the contingency reserve to cover the cost.

• Develop cost and performance baselines.

Answer explanation

The correct answer is to use the management reserve to cover the cost.

Since the health emergency was unforeseen, the management reserve would be the appropriate resource to cover the cost or mitigation. A management reserve is the amount of the project budget or project schedule held outside of the performance measurement baseline for management control purposes that is reserved for unforeseen work that is within the project scope.

Risk exploitation addressed opportunities, not threats. Risk exploitation is a response strategy whereby the project team acts to ensure that an opportunity occurs. Further, the question states that the issue must be mitigated, so the risk response has already been determined.  

A contingency reserve is the time or money allocated in the schedule or cost baseline for known risks with active response strategies. This option is incorrect because the risk was not known.

The cost baseline is the approved version of the time-phased project budget, excluding any management reserves, which can be changed only through formal change control procedures and is used as a basis for comparison to actual results.

A project is in the execution phase, and product testing is almost complete. A team member proposes that the testing can be fast-tracked by removing some of the tests. The team member believes this will help to finish the job earlier and give the project more float.

What should the project manager do?

• Request more information from the team member.

• Reject the team member's proposal.

• Discuss this proposal with the project team.

• 1. D.Ask the quality manager to consider the proposal.

Answer explanation

Removing certain tests is a risky move, and can't be done just to fast-track the project. The Project Manager should have considered all tests while assigning time for the testing phase. If the project is progressing as per the assigned time, no review of tests is needed, and the proposal should be rejected.

A project manager learns that in-house resources are insufficient to produce a critical component of a deliverable. This poses a significant threat. The quality of the component is integral to the project, and the in-house resources cannot guarantee high-quality output. The project manager decides to outsource the production of the component by contracting a third-party vendor.
Which threat response strategy did the project manager use?

• Accept

• Mitigate

• Enhance

• Transfer

Answer explanation

A threat is an event or condition that, if it occurs, has a negative impact on one or more objectives. In threat mitigation, action is taken to reduce the probability of occurrence and/ or impact of a threat. Early mitigation action is often more effective than trying to repair the damage after the threat has occurred. The project manager acted to reduce the probability of the threat associated with the development of a project-critical component. 

The other answers are incorrect because they do not align with this situation. 

Threat acceptance acknowledges the existence of a threat, but no proactive action is planned. 

Enhancement refers to opportunities, not threats. In opportunity enhancement, the project team acts to increase the probability of occurrence or impact of an opportunity. 

Escalation is appropriate when the project team or the project sponsor agrees that a threat is outside the scope of the project or that the proposed response would exceed the project manager’s authority.

In an agile development environment, when should a risk analysis be performed?

• 1. Before the start of each iteration

• After every scrum meeting

• In the retrospective meeting

• During the daily standup meeting

Answer explanation

The initial iteration would occur after an initial risk analysis, and that process should be repeated after every subsequent iteration. It is necessary to analyze new and existing risks to thoroughly understand their potential impact on project outcomes while preparing for each iteration. An iteration planning meeting is used to clarify the details of the backlog items, acceptance criteria, and work effort required to meet an upcoming iteration commitment. 
The other options are incorrect because they are not appropriate times to analyze risks. A daily standup meeting (also referred to as a daily scrum) is a brief collaboration meeting during which the project team reviews its progress from the previous day, declares intentions for the current day, and highlights any obstacles encountered or anticipated. A retrospective meeting in a regularly occurring workshop in which participants explore their work and results to improve both the process and product. These meetings provide an opportunity for the project team to review how it works and to suggest changes to improve processes and efficiency. Retrospectives can be useful for identifying risks.

During the execution phase of a project, a project team identifies a previously unforeseen risk that could delay the project for several months. What should the project manager do first?

• 1. Update the risk register.

• Plan for additional budget.

• Update the project sponsors.

• Perform qualitative risk analysis.

Answer explanation

The project manager should first update the risk register when a previously unforeseen risk is identified during the execution phase of a project. This will help ensure that the risk is properly documented and tracked, and that appropriate risk response strategies can be developed and implemented. 
The other options are incorrect because the risk register should be updated first.
Performing qualitative risk analysis, updating the project sponsors, and planning for additional budget may also be necessary depending on the specific circumstances of the risk, but updating the risk register should be the first step.

A risk was identified at the beginning of an agile project and a mitigation plan was established. The risk event occurs but the impact is much higher than anticipated and the originally planned response will be ineffective. The project team developed a more effective response, but it is drastically different from the original mitigation plan and must be implemented as soon as possible.
What should the project manager do?

• Implement a contingency response and inform the stakeholders afterward.

• 1. Implement only the initial response as outlined in the risk management plan.

• 1. Defer risk response until the next progress meeting to inform stakeholders.

• 1. Update the risk management plan and implement the newly created response.

Answer explanation

It is in the project's best interest to act quickly to mitigate the risk effectively and update the risk management plan accordingly. In agile project management, it's important to be adaptive and flexible. When a risk event's impact is much higher than anticipated, the agile approach is to adapt and modify the risk management plan accordingly. Updating the risk management plan will ensure that stakeholders are aware of the changes and the reasoning behind them. 
The other answer choices are incorrect. 
Implementing the original response will be ineffective due to the increased impact.
Deferring the risk response can lead to further complications and project delays. 
Implementing a contingency response without stakeholder awareness can lead to confusion and mistrust.

During a retrospective meeting, the project team confirmed that all deliverables were completed according to the specifications provided in the product backlog. However, the number of errors found during testing increased dramatically.

What should the project manager do?

• 1. Meet with quality assurance specialists to clarify the issue and seek resolutions.

• Review the risk management plan to determine the mitigation strategy.

• Register the risk in the risk register and monitor it during the next iteration.

• 2. Perform a Monte Carlo analysis to identify possible scenarios and actions.

Answer explanation

The project manager should meet with the quality assurance specialists to understand the root cause of the issue and work with them to find a solution. The reason is that the number of errors found during testing increased dramatically indicating that there is a quality issue with the deliverables. 
The other options are incorrect.
Reviewing the risk management plan will not help to identify the root cause of the issue.
Performing a Monte Carlo analysis is a statistical technique used to estimate the probability of different outcomes. It would not be helpful in this case because the project manager already knows that the number of errors found during testing increased dramatically. A Monte Carlo analysis would only be helpful if the project manager was trying to estimate the probability of this event occurring before it happened.
Registering the risk in the risk register and monitoring it during the next iteration is a good practice, but it is not the most immediate action that the project manager should take.