Risk Management

5 minutes 5 Questions

Risk Management is an integral part of the project governance that focuses on identifying, analyzing, and addressing the uncertainties that could affect the project’s objectives. It provides a structured approach to dealing with risks by adopting practices like risk identification, qualitative and …

Guide: Risk Management in Project Governance

Why is Risk Management Important:
Risk management is crucial because it helps to identify, assess, and manage potential risks that could impact project goals. A thorough risk analysis can help identify these risks ahead of time, allowing for planning and mitigation strategies.

What is Risk Management:
Risk Management is the identification, evaluation, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.

How it Works:
Risk Management involves a series of steps which start from identifying potential risks, analyzing the impact and likelihood of the risks occurring, determining responses, and then monitoring and reviewing the risks. Each step in the process assists in the management of risks.

Exam Tips: Answering Questions on Risk Management:
1. Understand the principles of risk management: It's crucial to know the fundamental principles of risk management. These principles form the basis for answering exam questions.
2. Know the risk management process: You need to understand the process, its stages and the reason for each stage. This will guide you when answering scenario-based questions.
3. Use proper terminology: Examiners always look out for the use of proper risk management terms, thus using them appropriately can earn you marks.
4. Practice risk management questions: The more you practice, the more you understand how to apply risk management principles to different situations.

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CAPM - Risk Management Example Questions

Test your knowledge of Risk Management

Question 1

After a recent internal security audit, the organization found that some user accounts have not been disabled after users left the company. Which risk mitigation strategy should be implemented?

Add a firewall rule Design an incident response plan Ask users to change their passwords more frequently Implement a proper account management process

Correct Answer: Implement a proper account management process

Improperly managed user accounts can lead to unauthorized access to the organization's resources. Implementing a proper account management process ensures that user accounts are continuously being updated and disabled when required.

Question 2

You are a lead in a project developing a new spacecraft. A significant problem is identified with the propulsion system that may delay the project. How should you address this risk?

Hide the problem from the stakeholders to avoid panic. Completely dismantle and redesign the propulsion system. Consult with the team for a backup plan, recalculate the project timeline considering the delay and keep the stakeholders informed. Ignore the problem and continue to work according to the original plan.

Correct Answer: Consult with the team for a backup plan, recalculate the project timeline considering the delay and keep the stakeholders informed.

Consulting with the team for a backup plan, recalculating the project timeline considering the delay and keeping the stakeholders informed is the best approach to dealing with identified risks or issues during project development. Ignoring the problem is against proactive problem-solving and risk management principles in project management. Completely dismantling and redesigning the propulsion system might be too drastic and could introduce more risks and delays. Also, hiding problems from stakeholders is deceitful and against the principle of transparency, which is key in Agile practice.

Question 3

While working on a mission critical project, a key project resource announces a sudden resignation, posing a significant risk to the project. How would you respond to this situation?

Immediately fire the resource without arranging a knowledge transfer session. Panic and try to convince the resource to stay regardless of their reasons. Delay the project indefinitely until a suitable replacement is found. Initiate a knowledge transfer plan, update the risk register, and start the hiring process for replacement.

Correct Answer: Initiate a knowledge transfer plan, update the risk register, and start the hiring process for replacement.

The best approach to this situation is to 'Initiate a knowledge transfer plan, update the risk register, and start the hiring process for replacement'. This is because in a situation where a key project resource announces a sudden resignation, it's important to ensure that the knowledge they carry is not lost and is smoothly transitioned to other team members or the new hire. Also, updating the risk register will help the management to track and mitigate this risk efficiently. Starting the hiring process for a replacement will ensure that the project does not suffer from a resource gap for a long timeThe answer 'Panic and try to convince the resource to stay regardless of their reasons' is not suitable because it does not address the risk to the project effectively and may lead to more dissatisfaction from the resource. The answer 'Immediately fire the resource without arranging a knowledge transfer session' is not recommended because it might lead to the critical knowledge being lost and the project might suffer even more. 'Delaying the project indefinitely until a suitable replacement is found' is also not a feasible solution because it might have significant impact on the project timeline, cost and even the business objectives.

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