Risk Management Professional Exam Prep

1.

What does PMI stand for?

A.

Post-Management Institute
B.

Pre-Management Institute
C.

Project Management Institute
D.

Project Management Index

Correct Answer
C. Project Management Institute

Explanation
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.

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2.

Which of the following ways can risk be transferred?

A.

Warranty
B.

Loan
C.

Insurance
D.

Stocks

Correct Answer
C. Insurance

Explanation
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.

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3.

What does RACI stand for?

A.

Responsible, Accountable, Confirmed, Informed
B.

Respectful, Accountable, Consulted, Informed
C.

Responsible, Accountable, Consulted, Informed
D.

Respectful, Accountable, Confirmed, Informed

Correct Answer
C. Responsible, Accountable, Consulted, Informed

Explanation
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.

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4.

One of the following processes has the risk register as its primary output. Which one?

A.

Identify risks
B.

Monitor risks
C.

Qualitative risks
D.

Quantitative risks

Correct Answer
A. Identify risks

Explanation
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.

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5.

John is at a bidder's conference and sees Anthony, his childhood friend, at the second row. What should John do?

A.

Walk away from the stage and resign from the process
B.

Inform the management about your relationship
C.

Give him some confidential information
D.

Absolutely nothing

Correct Answer
B. Inform the management about your relationship

Explanation
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.

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6.

If a property is valued at $200,000, can be insured at $40,000, and it has a 20% probability of loss, then the insurance is...

A.

Higher than the probable loss
B.

Less than the probable loss
C.

Same as the probable loss
D.

None of the options

Correct Answer
C. Same as the probable loss

Explanation
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.

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7.

What does SWOT analysis stand for?

A.

Sustain, watch, optimize and take risks
B.

Strengths, weaknesses, opportunities and threats
C.

Supply, wait, optimize and take risks
D.

Sustain, watch, optimize and test

Correct Answer
A. Sustain, watch, optimize and take risks

Explanation
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.

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8.

Risk tolerance has to be determined for what?

A.

A team to rank a project risk
B.

The management to know how other manager act on a project
C.

A team to schedule the project
D.

Estimating a project

Correct Answer
A. A team to rank a project risk

Explanation
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.

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9.

Which of these activates contingency response?

A.

Risk response
B.

Risk prompt
C.

Risk activation
D.

Risk trigger

Correct Answer
D. Risk trigger

Explanation
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.

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10.

Are fixed price plus incentive contracts riskier than cost plus fixed fee contract?

A.

Always true
B.

True, but not always
C.

Completely false
D.

Depends on the contract

Correct Answer
A. Always true

Explanation
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.

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