BSB51407 - Diploma of
Project Management
Project Risk Management
Question & Answers
Plus Exercises
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Table of Contents
Table of Contents ...............................................................................................................................2
Questions for Risk Management .............................................................................................................. 3
Answers for Risk Management ................................................................................................................. 6
Exercises - Manage Project Risk ..........................................................................................................7
Reflection: Risk management planning ................................................................................................... 7
Reflection: Stakeholder analysis .............................................................................................................. 7
Reflection: Critical success factors ........................................................................................................... 8
Risk categories .......................................................................................................................................... 9
Reflection: Risk categorisation ............................................................................................................... 10
Risk categories .................................................................................................................................... 10
Reflection: Risk identification ................................................................................................................ 10
Reflection: Risks as opportunities .......................................................................................................... 11
Reflection: Consequence and Likelihood ............................................................................................... 12
Reflection: Quantitative risk analysis techniques .................................................................................. 13
Reflection: Prioritisation of risks ............................................................................................................ 14
Reflection: Risk response strategies ...................................................................................................... 15
Reflection: The risk register ................................................................................................................... 16
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Questions for Risk Management
1. When is it appropriate to accept a project risk?
a) It is never appropriate to accept a project risk.
b) All risks must be mitigated or transferred.
c) It is appropriate to accept a risk if the project team has never completed this type of
project work before.
d) Only if the risk is in balance with the reward by accepting the project risk.
2. Frances is the project manager of the LKJ Project. Which of the following techniques will she use
to create the risk management plan?
a) Risk tolerance
b) Status meetings
c) Planning meetings
d) Variance meetings
3. Which of the following is not part of a risk management plan?
a) Roles and responsibilities
b) Methodology
c) Technical Assessment Board compliance
d) Risk categories
4. You are the project manager of the GHK Project. You and the manufacturer have agreed to
substitute the type of plastic used in the product to a slightly thicker grade should there be more
than a seven-percent error in production. The thicker plastic will cost more and require the
production to slow down, but the errors should diminish. This is an example of which of the
following?
a) Threshold
b) Tracking
c) Budgeting
d) JIT manufacturing
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5. An organisation’s risk tolerance is also known as what?
a) The utility function
b) Herzberg’s Theory of Motivation
c) Risk acceptance
d) The risk-reward ratio
6. A risk trigger is also called which of the following?
a) A warning sign
b) A delay
c) A cost increase
d) An incremental advancement of risk
7. The customers of the project have requested additions to the project scope. The project
manager brings notice that additional risk planning will need to be added to the project
schedule. Why?
a) The risk planning should always be the same amount of time as the activities required
by the scope change.
b) Risk planning should always occur whenever the scope is adjusted.
c) Risk planning should only occur at the project manager’s discretion.
d) The project manager is incorrect. Risk planning does not need to happen at every
change in the project.
8. Which one of the following best describes the risk register?
a) It documents all of the outcomes of the other risk management processes.
b) It’s a document that contains the initial risk identification entries.
c) It’s a system that tracks all negative risks within a project.
d) It’s part of the project’s PMIS for integrated change control
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9. _______________________ include(s) fire, theft, or injury, and offer(s) no chance for gain.
a) Business risks
b) Pure risks
c) Risk acceptance
d) Life risks
10. Complete this sentence: A project risk is a(n) ______________________ occurrence that can
affect the project for good or bad.
a) Known
b) Potential
c) Uncertain
d) Known unknown
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Answers for Risk Management
1. d. Risks that are in balance with the reward are appropriate for acceptance.
2. c. Planning meetings are used to create the risk management plan. The project manager, project
team leaders, key stakeholders, and other individuals with the power to make decisions regarding
risk management attend the meetings.
3. c. The technical assessment board may be used as part of the Change Control System. It is not
relevant to risk management planning.
4. a. An error value of seven percent represents the threshold the project is allowed to operate under.
Should the number of errors increase beyond seven percent, the current plastic will be
substituted.
5. d. The Risk Reward Ratio.
6. a. Risk triggers can also be known as warning signs. Triggers signal that a risk is about to happen or
has happened.
7. b. When the scope has been changed, the project manager should require risk planning to analyse
the additions for risks to the project success.
8. a. The risk register documents all of the outcomes of the other risk management processes.
9. b. Pure risks are the risks that could threaten the safety of the individuals on the project.
10. c. Risks are not planned, they are left to chance. The accommodation and the reaction to a risk can
be planned, but the event itself is not planned. If risks could be planned, Las Vegas would be out
of business.
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Exercises - Manage Project Risk
Reflection: Risk management planning
Think of a project you were involved in or are currently doing. Think about how much emphasis was
placed on establishing the risk management context and risk management plan before the project
began in earnest.
 Provide a brief description of the project
 Describe what tools, techniques and processes you planned to use in the project
 Describe the involvement of your project team members in establishing the risk management
context and risk management planning
Reflection: Stakeholder analysis
Read Case Study 3 about Information Systems. Identify the stakeholders in the case study. Then
complete a stakeholder analysis of all the stakeholders you identified, using the table below to guide
your response. Make sure you specify the expectations of the stakeholders and what benefits and
outcomes they would like to see at the conclusion of the project.
Stakeholders
Expectations from the Project
Desired Outcome
Some stakeholders’ views are more important to consider than others. Classify the stakeholders into
three groups according to their importance:
A-
CRITICAL to the project’s success and must be involved in the decision making process.
BIMPORTANT and must be consulted regularly to ensure they know their point of view is included
in project deliberations.
CTO BE CONSIDERED who may be involved and will need regular communications to keep them
informed.
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Stakeholder
Needs/Expectations
Grouping (A/B/C)
What are the implications for dealing with critically important stakeholders versus other stakeholder
groups?
Reflection: Critical success factors
What were the critical success factors for the training program in Case Study 2? Describe the project’s
context and objectives before identifying the critical success factors. Write a summary of how they
could potentially affect the project’s objectives below:
Project context:
Project objective:
Critical success factors’ effect on project objectives
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Risk categories
Risk categories are a useful way to provide a structure that facilitates risk identification and ensures that
risks are not accidentally overlooked. A suggested list of risk categories and some associated risks are
contained in the table below:
Risk category
Associated questions and risks
Financial
Will the budget for this activity be met?
Will the client pay?
Legislative and compliance
Does your organisation know how to meet required (quality, service, OHS,
etc) standards?
Will an external audit demonstrate your organisation’s compliance with the
standards?
Personnel
Are employees competent to perform required roles?
Are there enough staff to complete the tasks within allocated timelines?
Political and community
Does the outcome of the process meet with community expectations?
Could the process result in a decline in environmental conditions?
Project management
Will the task be finished within timelines?
Has the project been scoped realistically?
Operational management
Are the required technologies/equipment/raw materials available?
Could the activity threaten the OHS of staff?
Systems
Are record keeping and information management systems in place for this
activity?
Have quality assurance measures been developed?
Third parties
Are your objectives dependent on the efforts of a third party?
Have contracts been finalised with relevant suppliers?
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Reflection: Risk categorisation
Create risk categories for the risks associated with building the pergola in Case Study 1.
Risk categories
Are there any other risk categories or examples of individual risks you can think of that could be added?
Reflection: Risk identification
Identify risks associated with the pergola project in Case Study 1. Place these risks into the appropriate
category using the risk categories you developed in previous reflection activity. Write down how the
risk can potentially affect the project objectives.
Risk category
Associated risks
How the risk prevents reaching required
objectives
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Risk category
Associated risks
How the risk prevents reaching required
objectives
Reflection: Risks as opportunities
Think of a project you worked on in the past. Think of at least two risks that presented as an
opportunity to enhance project objectives or negative risks that could be thought of in a positive
manner. Describe the positive risks in the space provided below.
1.
2.
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Reflection: Consequence and Likelihood
Using the risks you identified in the previous activity, assign a rating to each risk for both its
consequence (impact) and likelihood (probability) of occurring. Then provide a description of the risk’s
potential consequence and likelihood of occurring. Be sure to include some ‘positive’ risks as well which
may present opportunities to enhance project objectives.
Risk
Consequence rating
Description of possible
consequences
Risk
Likelihood rating
Explanation of likelihood rating
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Reflection: Quantitative risk analysis techniques
What quantitative risk analysis techniques are you familiar with that are used in your organisation? List
them below and provide a brief description of why these tools are preferred by your organisation.
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Reflection: Prioritisation of risks
Having combined the consequence/likelihood ratings in the previous activity, assign the risk with the
highest priority a score of “1”, the next most significant one a rating of “2”, and so on. Provide a
rationale for why you prioritised the risks that way you did.
Risk
Combined Rating
Total
Risk Priority
Rationale for Prioritisation
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Reflection: Risk response strategies
For the risks you identified, analysed and prioritised in the previous activities, apply at least one risk
treatment strategy for each identified risk explaining and justifying your response. Use the table below
to guide your thinking in this activity.
Risk
Option
Avoidance
Mitigation (consider
both consequence
and likelihood)
Transference (In Full
Or Part)
Acceptance
Exploit
Share
Enhance
Contingency Plan
Explanation of
treatment
Rationale for
treatment
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Reflection: The risk register
Create a risk register for the risks you have been working with through in the previous relevant
activities. Document the results of your risk management activities in a report. Your report should
contain the following sections as a minimum, however feel free to add more topics if you wish. You may
wish to look at the risk register used in your workplace to guide how you structure your register.
Topics should include:
 Critical success factors
 Risk categories
 Any assumptions made
 Description of the specific risks in those categories
 Rating scales and results used to rate consequence and likelihood
 A completed probability/likelihood matrix
 Documentation on the process used to prioritise risks
 Documentation of the treatment options selected and the reasoning behind the treatment
option selected.