QUESTION: 265

Which of the following statements is NOT true regarding the risk management plan?

The risk management plan is an output of the Plan Risk Management process.
The risk management plan is an input to all the remaining risk-planning processes.
The risk management plan includes a description of the risk responses and triggers.
The risk management plan includes thresholds, scoring and interpretation methods, responsible parties, and budgets.

Answer(s): C

Explanation:

The risk management plan details how risk management processes will be implemented, monitored, and controlled throughout the life of the project. The risk management plan does not include responses to risks or triggers. Responses to risks are documented in the risk register as part of the Plan Risk Responses process.

Incorrect Answers:
A, B, D: These all statements are true for risk management plan. The risk management plan details how risk management processes will be implemented, monitored, and controlled throughout the life of the project. It includes thresholds, scoring and interpretation methods, responsible parties, and budgets. It also acts as input to all the remaining risk-planning processes.

Reveal Solution Next Question

QUESTION: 266

You are the project manager of a project in Bluewell Inc. You and your project team have identified several project risks, completed risk analysis, and are planning to apply most appropriate risk responses. Which of the following tools would you use to choose the appropriate risk response?

Project network diagrams
Cause-and-effect analysis
Decision tree analysis
Delphi Technique

Answer(s): C

Explanation:

Decision tree analysis is a risk analysis tool that can help the project manager in determining the best risk response. The tool can be used to measure probability, impact, and risk exposure and how the selected risk response can affect the probability and/or impact of the selected risk event. It helps to form a balanced image

of the risks and opportunities connected with each possible course of action. This makes them mostly useful for choosing between different strategies, projects, or investment opportunities particularly when the resources are limited. A decision tree is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

Incorrect Answers:
A: Project network diagrams help the project manager and stakeholders visualize the flow of the project work, but they are not used as a part of risk response planning.

B: Cause-and-effect analysis is used for exposing risk factors and not an effective one in risk response planning. This analysis involves the use of predictive or diagnostic analytical tool for exploring the root causes or factors that contribute to positive or negative effects or outcomes.

D: Delphi technique is used for risk analysis, i.e., for identifying the most probable risks. Delphi is a group of experts who used to rate independently the business risk of an organization. Each expert analyzes the risk independently and then prioritizes the risk, and the result is combined into a consensus.

Reveal Solution Next Question

QUESTION: 267

What is the MAIN purpose of designing risk management programs?

To reduce the risk to a level that the enterprise is willing to accept
To reduce the risk to the point at which the benefit exceeds the expense
To reduce the risk to a level that is too small to be measurable
To reduce the risk to a rate of return that equals the current cost of capital

Answer(s): A

Explanation:

Risk cannot be removed completely from the enterprise; it can only be reduced to a level that an organization is willing to accept. Risk management programs are hence designed to accomplish the task of reducing risks.

Incorrect Answers:
B: Depending on the risk preference of an enterprise, it may or may not choose to pursue risk mitigation to the point at which benefit equals or exceeds the expense. Hence this is not the primary objective of designing the risk management program.

C: Reducing risk to a level too small to measure is not practical and is often cost-prohibitive.

D: Reducing risks to a specific return ignores the qualitative aspects of the risk which should also be considered.

Reveal Solution Next Question

QUESTION: 268

Which of the following terms is described in the statement below?

"They are the prime monitoring indicators of the enterprise, and are highly relevant and possess a high probability of predicting or indicating important risk."

Key risk indicators
Lag indicators
Lead indicators
Risk indicators

Answer(s): A

Explanation:

Key Risk Indicators are the prime monitoring indicators of the enterprise. KRIs are highly relevant and possess a high probability of predicting or indicating important risk. KRIs help in avoiding excessively large number of risk indicators to manage and report that a large enterprise may have.

Incorrect Answers:
B: Lag indicators are the risk indicators that is used to indicate risk after events have occurred.

C: Lead indicators are the risk indicators that is used to indicate which capabilities are in place to prevent events from occurring.

D: Risk indicators are metrics used to indicate risk thresholds, i.e., it gives indication when a risk level is approaching a high or unacceptable level of risk. The main objective of a risk indicator is to ensure tracking and reporting mechanisms that alert staff about the potential risks.

Reveal Solution Next Question

Free CRISC Exam Braindumps (page: 67)

QUESTION: 265

Explanation:

QUESTION: 266

Explanation:

QUESTION: 267

Explanation:

QUESTION: 268

Explanation: