Project Risk Management
Domain 9 tests the seven risk processes and the vocabulary that separates risk from issue, threat from opportunity, and contingency reserve from management reserve. Quantitative items typically use expected monetary value or a small decision tree.
Identify and analyse
- A risk is an uncertain event that, if it occurs, affects objectives; it has a cause, an event, and an impact. An issue has already happened.
- Identification tools: brainstorming, Delphi (anonymous, multi-round, converging), interviews, root-cause analysis, SWOT, checklists, assumption analysis, document review.
- Qualitative analysis: probability-impact matrix, risk categorisation via a risk breakdown structure, data-quality assessment, urgency.
- Quantitative analysis: expected monetary value, decision trees, Monte Carlo simulation, sensitivity analysis displayed as a tornado chart.
Respond and monitor
- Threat responses: escalate, avoid, transfer, mitigate, accept. Opportunity responses: exploit, share, enhance, accept.
- Transferring risk, for example by insurance or fixed-price outsourcing, shifts financial responsibility but does not eliminate the risk.
- Contingency reserve covers known-unknowns; management reserve covers unknown-unknowns.
- Monitoring uses risk audits, reserve analysis, technical performance analysis, and risk reassessment. A workaround is an unplanned response to an emerged risk; a corrective action fixes an existing deviation.
Worked example
Option A: invest 100万元, with a 70% chance of earning 300万元 and a 30% chance of earning 50万元. EMV = 0.7 × 300 + 0.3 × 50 − 100 = 210 + 15 − 100 = 125万元. Option B: invest 60万元, with a 90% chance of 150万元 and a 10% chance of zero. EMV = 135 − 60 = 75万元. Choose A on EMV, while noting in the answer that its downside (a 50万元 return) is larger than B's.
Traps that cost marks
- Saying transfer eliminates risk.
- Using management reserve for an identified, assessed risk.
- Labelling an already-occurred problem as a risk.
- Treating acceptance as always passive; active acceptance means holding contingency reserve.
- Forgetting that EMV is a statistical average, not a guarantee.