Risk Management Professional Exam Prep

Risk can be transferred through insurance. Insurance is a contractual agreement between an individual or organization and an insurance company, where the insurer agrees to provide financial compensation in the event of specified risks or losses. By purchasing insurance, individuals or organizations transfer the potential financial burden of a risk to the insurance company. This allows them to mitigate the impact of potential losses and protect their assets or investments.

PMI stands for Project Management Institute. This organization is globally recognized for its standards and certifications in project management. It provides resources, training, and networking opportunities for project managers, helping them enhance their skills and knowledge in the field. The correct answer is Project Management Institute because it accurately represents the acronym PMI and its association with project management.

The process of "Identify risks" is the one that has the risk register as its primary output. This process involves systematically identifying potential risks that could affect the project objectives. The risk register is a document that records all identified risks, their potential impact, and any other relevant details. By identifying risks and documenting them in the risk register, project teams can better understand and manage these risks throughout the project lifecycle.

John should inform the management about his relationship with Anthony because it is important to disclose any personal connections or potential conflicts of interest in a professional setting. By informing the management, John ensures transparency and maintains the integrity of the bidding process. This allows the management to make informed decisions and take appropriate actions if necessary.

RACI stands for Responsible, Accountable, Consulted, Informed. This acronym is commonly used in project management and organizational decision-making processes. It helps to clarify the roles and responsibilities of team members and stakeholders in a project or task. The responsible person is the one who performs the task, the accountable person is the one who is ultimately answerable for the task's completion, the consulted people are those who provide input and expertise, and the informed people are those who need to be kept up-to-date on the progress and outcomes of the task.

The insurance is the same as the probable loss because the property can be insured at $40,000 and there is a 20% probability of loss. Therefore, if a loss were to occur, the insurance would cover the full amount of the loss, which is $40,000.

Fixed price plus incentive contracts are riskier than cost plus fixed fee contracts because they involve a higher level of uncertainty and potential financial loss for the contractor. In fixed price plus incentive contracts, the contractor's profit is directly tied to meeting certain performance targets or achieving specific outcomes. If the contractor fails to meet these targets, they may not receive the full incentive payment and could potentially incur financial penalties. On the other hand, cost plus fixed fee contracts provide more financial security for the contractor as they are reimbursed for their costs and receive a fixed fee regardless of the project's outcome. Therefore, it can be concluded that fixed price plus incentive contracts are riskier than cost plus fixed fee contracts.

A risk trigger is an event or condition that indicates the need to activate a contingency response. It serves as a signal that a risk has occurred or is about to occur, prompting the implementation of predefined actions to mitigate its impact. Therefore, a risk trigger is the correct choice as it directly activates the contingency response. Risk response, risk prompt, and risk activation do not specifically imply the initiation of contingency measures in the same way as a risk trigger does.

The correct answer is "A team to rank a project risk." Risk tolerance refers to the level of risk that a team is willing to accept or tolerate when ranking project risks. This determination is necessary for the team to effectively prioritize and assess the potential impact and likelihood of various risks associated with the project. By understanding their risk tolerance, the team can make informed decisions about which risks to address first and allocate resources accordingly.

SWOT analysis stands for strengths, weaknesses, opportunities, and threats. This analysis is a strategic planning tool used to evaluate an organization's internal strengths and weaknesses, as well as external opportunities and threats. By identifying these factors, organizations can develop strategies to capitalize on their strengths, address their weaknesses, take advantage of opportunities, and mitigate potential threats. The answer "sustain, watch, optimize and take risks" does not accurately represent the components of a SWOT analysis.