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Project Risk Management

Basics of project risk management.

This subtopic covers the processes of identifying, analyzing, prioritizing and controlling project risks to maximize the possibility of positive outcomes.
5 minutes 5 Questions

Project Risk Management is a systematic process within project management that focuses on identifying, analyzing, and responding to risks that may impact project objectives. It's one of the ten knowledge areas in the PMBOK Guide, which is crucial for the CAPM certification. The main processes in Pā€¦

Concepts covered: Risk Register, Risk Assessment, Risk Prioritization, Quantitative Risk Analysis, Risk Management Plan, Risk Communication, Risk Review, Risk Monitoring and Control, Qualitative Risk Analysis, Risk Breakdown Structure (RBS)

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CAPM - Project Risk Management Example Questions

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Question 1

In a large scale product manufacturing project, you have one category as 'Regulatory Risks' in your RBS. Which of the following risk would fall in this category?

Correct Answer: Risk of new environmental regulatory policies affecting production

Regulatory risks are associated with the potential for laws or regulations to impact a project or company. The answer 'Risk of new environmental regulatory policies affecting production' falls under this category as it pertains to potential changes in legislation that can affect the production process. The other answers are related to other types of risks; 'Risk of an unexpected increase in raw material prices' is a financial risk. 'Risk of equipment breakdown' is an operational risk. 'Risk of workers going on a strike' is a human resources or labor risk.

Question 2

In a Risk Breakdown Structure (RBS) for a global e-commerce platform launch, which category would best encompass the risk of 'Payment gateway integration failures'?

Correct Answer: Technical Risks

The best answer for this question is 'Technical Risks'.

Payment gateway integration failures are primarily related to the technical aspects of implementing and connecting the e-commerce platform with various payment systems. This falls under the category of Technical Risks in a Risk Breakdown Structure (RBS).

Reasons why 'Technical Risks' is the most appropriate category:

1. Integration involves complex technical processes, APIs, and software compatibility issues.
2. It deals with the functionality and performance of the payment system within the e-commerce platform.
3. Technical expertise is required to address and mitigate these risks.

Why other options are less suitable:

'Operational Risks' typically refer to risks associated with day-to-day operations, processes, and systems. While payment processing is part of operations, the specific risk of integration failures is more technical in nature.

'Financial Risks associated with payment processing' might seem relevant, but this category would more likely include risks such as currency fluctuations, transaction fees, or fraud. The integration failure itself is a technical issue that could lead to financial consequences, but is not inherently a financial risk.

'External Vendor Risks' could be considered if the payment gateway is provided by a third-party vendor. However, the integration process itself is still a technical challenge that the e-commerce platform team must address, regardless of the vendor's involvement.

In an RBS for a global e-commerce platform launch, categorizing payment gateway integration failures under Technical Risks ensures that the appropriate technical resources and mitigation strategies are allocated to address this critical aspect of the project.

Question 3

In a Risk Breakdown Structure (RBS) for a complex aerospace project, which of the following would most likely be a top-level category?

Correct Answer: Technical Risks

The best answer for this question is 'Technical Risks'.

In a Risk Breakdown Structure (RBS) for a complex aerospace project, top-level categories are broad and encompass multiple sub-categories of risks. 'Technical Risks' is the most appropriate top-level category among the given options.

Technical Risks would cover a wide range of potential issues related to the aerospace project's technical aspects, including design, engineering, and performance risks. This category could include subcategories such as propulsion systems, avionics, materials, and more.

The other options are not as suitable for top-level categories in an RBS:

'Propulsion System Failures' is too specific to be a top-level category. It would likely be a subcategory under Technical Risks.

'Project Management Office Risks' is not a typical top-level category in an RBS. Project management risks are usually part of a broader category like 'Management Risks' or 'Organizational Risks'.

'Operational and Maintenance Challenges' is also too specific for a top-level category. These would typically fall under broader categories such as 'Operational Risks' or 'Lifecycle Risks'.

In a well-structured RBS for an aerospace project, you would expect to see top-level categories such as Technical Risks, Financial Risks, Schedule Risks, and External Risks, among others. These broad categories allow for a comprehensive and organized approach to risk management in complex projects.

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