Risk Management

Correct Answer: Develop a contingency plan

Developing a contingency plan is the best course of action for a low probability and high impact risk. Ignoring the risk is not responsible project management. Informing all stakeholders immediately is not necessary unless the risk response requires their involvement. Implementing all risk avoidance measures or spending extra resources to eliminate it may not be cost-effective. Transferring the risk to another team is not feasible as it remains within the project.

Correct Answer: Mitigate the risk by taking actions to reduce its probability or impact

The most appropriate risk response strategy for a risk with high probability and high impact is to mitigate the risk. Mitigation involves taking proactive steps to reduce the likelihood of the risk occurring or to minimize its potential impact on the project. Accepting a high probability, high impact risk is not advisable as it could lead to significant negative consequences for the project. The risk is likely to occur and its impact could jeopardize project objectives. Transferring the risk to a third party may not be feasible or cost-effective for all high probability, high impact risks. It is better to focus on mitigation strategies within the project team's control to manage the risk effectively.

Correct Answer: Allocating additional resources for quality assurance

The best answer for this question is 'Allocating additional resources for quality assurance.' This is considered a proactive risk management strategy because it addresses potential technical issues before they occur. Here's why this is the correct choice: 1. Proactive approach: By allocating resources for quality assurance upfront, the project team is taking steps to prevent or minimize technical issues rather than waiting for them to happen. 2. Risk mitigation: Quality assurance helps identify and resolve potential technical problems early in the project lifecycle, reducing the likelihood of major issues arising later. 3. Cost-effective: Addressing technical issues early is often less expensive and time-consuming than fixing them after they've become significant problems. The other options are not as suitable: - Implementing a comprehensive contingency plan after issues arise is reactive, not proactive. - Waiting for technical problems to occur before addressing them is also reactive and can lead to significant delays and increased costs. - Increasing the project timeline by 50% to accommodate potential delays is an excessive measure that doesn't directly address the root cause of technical issues. While some buffer in the timeline may be necessary, it should be based on a thorough risk assessment rather than an arbitrary percentage. In conclusion, allocating additional resources for quality assurance is the most proactive and effective strategy for managing the risk of technical issues in a project.