Back to Risk Categories and Taxonomy

Risk Breakdown Structure (RBS)

5 minutes 5 Questions

The Risk Breakdown Structure (RBS) is a hierarchical framework used in risk management to categorize and organize potential risks within a project. Similar to a Work Breakdown Structure (WBS) that decomposes project deliverables, the RBS systematically breaks down risks into progressively finer levels of detail. This structured approach allows project managers to systematically identify, assess, and manage risks by providing a clear visualization of all possible risk sources and categories. By employing an RBS, project teams can ensure a comprehensive evaluation of risks across all aspects of the project. The hierarchical nature of the RBS facilitates the grouping of risks into main categories such as technical, external, organizational, and project management risks. Each main category can be further subdivided into more specific risk areas. For example, technical risks might include design risks, technology risks, and performance risks. This detailed breakdown helps in not only identifying risks but also in understanding their root causes and interrelationships. Implementing an RBS enhances communication among stakeholders by providing a common language and framework for discussing risks. It aids in prioritizing risks by highlighting which areas have the highest concentration of potential issues. Additionally, the RBS supports better allocation of resources by identifying where risk mitigation efforts are most needed. Overall, the Risk Breakdown Structure is a vital tool in proactive risk management, enabling teams to anticipate challenges and develop effective strategies to mitigate them.

Test mode:
Start practice test
PMI-RMP - Risk Categories and Taxonomy Example Questions

Test your knowledge of Amazon Simple Storage Service (S3)

Question 1

A project manager encounters a globalization risk during the implementation of a project. This risk was not identified during the initial project risk assessment. How should the project manager address this risk in the Risk Breakdown Structure (RBS)?

Correct Answer: Include it under the 'External risks' category

Globalization risks are best categorized under 'External risks'. These are risks beyond the control of the project team, typically originating from the environment in which the project is being implemented, such as economic, political, or sociocultural factors, which includes factors related to globalization. 'Project risks' are more about the inherent uncertainties of the work within the project. 'Technical risks' are related to technology that is being used in the project. 'Risk management process risks' is about risks that reside in the process of risk management itself. The categorization of a risk in the Risk Breakdown Structure (RBS) is not about when the risk became apparent or was identified, but rather its nature and source.

Question 2

During the execution phase of a construction project, a sudden increase in the costs of raw materials impacts the overall budget. According to the Risk Breakdown Structure (RBS), which category does this risk fall under?

Correct Answer: Resource risks

The sudden increase in the costs of raw materials falls under the category of 'Resource risks' in the Risk Breakdown Structure (RBS). These type of risks are associated with the availability and volatility in price of resources, including raw materials needed for project execution. 'Project risks' by contrast, relate to overarching project issues, like scheduling or budgeting, and are not specifically tied to material costs. 'Technical risks' are related to technical issues, such as difficulties in applying a certain technique or technology, not related to cost of raw materials. 'External risks' points towards risks from the external environment like legal regulations, market conditions or natural disasters, they might indirectly affect the cost of materials but they are not directly related to the raw materials of a project. Therefore, the best answer is 'Resource risks.'

Question 3

A project manager is preparing to address contractual risks in their project's Risk Breakdown Structure (RBS). Which of these situations represents a contractual risk?

Correct Answer: A vendor failing to deliver key components on time

Contractual risks in a project are risks associated with the binding agreement (contract) between the project team and external entities such as vendors or suppliers. These could involve failure of the external entities to meet terms and conditions specified in the contract, such as delivery commitments. Among the provided options, 'A vendor failing to deliver key components on time' indeed represents such a risk. In contrast, a natural disaster affecting the project timeline represents an environmental risk. A sudden decline in the value of the company's stock represents a financial or business risk, not a contractual risk. A critical team member leaving the project midway represents a personnel or staffing risk, again, not a contractual one. Therefore, these situations do not represent contractual risks in the Risk Breakdown Structure of a project.

Go Premium

PMI Risk Management Professional Preparation Package (2024)

  • 3223 Superior-grade PMI Risk Management Professional practice questions.
  • Accelerated Mastery: Deep dive into critical topics to fast-track your mastery.
  • Unlock Effortless PMI-RMP preparation: 5 full exams.
  • 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
  • Bonus: If you upgrade now you get upgraded access to all courses
  • Risk-Free Decision: Start with a 7-day free trial - get premium features at no cost!
More Risk Breakdown Structure (RBS) questions
70 questions (total)
Start 70 question test