Risk second set

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School

Centennial College *

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730

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Finance

Date

Feb 20, 2024

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pdf

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Uploaded by MateJayMaster826

Test #2 ‐ Results Attempt 1 of 1 Written Aug 4, 2023 5:10 PM ‐ Aug 4, 2023 6:33 PM Attempt Score 38 / 50 ‐ B+ Overall Grade (Highest Attempt) 38 / 50 ‐ B+ Question 1 0 / 1 point Which of the following is NOT a method of identifying risk?

Question 2 1 / 1 point Emily has just joined a project as the Project Manager. One of the project documents available to Emily breaks down all the risks in a hierarchical fashion. What is this document called? 1) Pareto Charts 2) Decomposing the WBS 3) Brainstorming 4) Delphi

Question 3 1 / 1 point In your project, you are creating a diagram that describes the decision under consideration and implications of choosing one or another of the available alternatives. This will help in: 1) Risk Breakdown Structure. 2) Risk Matrix 3) Work Breakdown Structure 4) Risk Management Plan

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Question 4 1 / 1 point Only one of the following statements is true. Which is it? 1) Determining which risks can impact the project the most 2) Getting a Qualitative Analysis of the risk 3) Determining which decision yields the greatest expected value 4) Translating the uncertainties at a detailed level into potential impact on objectives expressed at the level of the total project 1) Risk Response Plan is another name for Risk Management Plan. 2) Risks, if they happen, always have negative impacts on a project. 3) Risk register documents all the risks in detail. 4) When evaluating risks their impact should be considered, however probability of occurrence is not important.

Question 5 0 / 1 point James is trying to come up with a workaround for a risk event that he has encountered but for which he has no plan. What part of risk management is James engaged in? Question 6 1 / 1 point Rafsan decides to change the project plan to eliminate the risk or the condition that causes the risk in order to protect the project objectives from its impact. What type of risk response strategy is Rafsan doing? 1) Risk control 2) Quantitative risk analysis 3) Risk response planning 4) Risk identification Transfer Acceptance Avoidance Mitigation

Question 7 1 / 1 point Elsie wishes to improve the chances for an event to happen so the opportunity becomes more certain. What risk response strategy should she adopt? Question 8 0 / 1 point During which stage of Risk Management are Risk Rating tables developed? Exploitation Sharing Enhancement Escalation 1) Perform Qualitative risk analysis 2) Plan Risk 3) Perform Quantitative risk analysis 4) Identify Risks

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Question 9 1 / 1 point Which of the following statements is true about risks? Question 10 1 / 1 point Ibti is the project manager of a small but important project that his company is undertaking. She has come upon a risk is outside the scope of the project. What should she do? 1) Risks if they happen always have negative impact and not positive. 2) When evaluating risks their impact should be considered, however probability of occurrence is not important. 3) Risk response plan is another name for Risk Management Plan. 4) The Risk Register documents all the risks in detail. Escalate the risk to the level that matches the objectives that would be affected if the threat occurred. Record the risk in the Risk Register and keep monitoring it to see if it occurs. Accept the risk since it is outside the scope of the project. Nothing because any proposed response would exceed his authority.

Question 11 1 / 1 point At every scheduled risk meetings you check for signs that a risk has occurred or is about to occur. These signs are referred to as: Question 12 1 / 1 point Increased frequency of project monitoring is useful in dealing with cost and technical risk. What is the risk response strategy employed in this instance? 1) Contingencies 2) Secondary Risks 3) Triggers 4) Risk Milestones

Question 13 1 / 1 point Danielle is a Project manager. She is currently determining the impacts that different risk events might have on her project. What is Danielle doing? 1) Transfer 2) Avoid 3) Accept 4) Mitigate

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Question 14 1 / 1 point Jesus is using the Monte Carlo modeling technique to determine the overall effect of a high probability high impact risk event on the project objectives. What phase of risk management is Jesus in? 1) Risk Response Planning 2) Qualitative Risk Analysis 3) Risk Identification 4) Risk Management Planning

Question 15 1 / 1 point Nitika is in charge of a project. During which phase of the project would she encounter the lowest amount at stake? 1) Perform Qualitative risk analysis 2) Plan Risk responses 3) Perform Quantitative risk analysis 4) Identify Risks

Question 16 1 / 1 point Which of the following scheduling methods uses more risk management concepts than the others? 1) Post project evaluation 2) Execution 3) Implementation 4) Conceptual 1) PERT 2) CPM 3) PDM 4) ADM

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Question 17 1 / 1 point In your project, you have identified important risks, and planned appropriate responses to the risks. Some risks, for example the possibility of natural disasters, has been documented and accepted in your risk management plan. If there are risks that happen because of the response measures that you took steps, then such risks are called: Question 18 1 / 1 point In your project, there is: * 50% probability for $ 40,000 profit * 50% probability for $ 25,000 loss What is the Expected profit in your project? 1) Unidentifiable Risks 2) Subsequent Risks 3) Secondary Risks 4) Residual Risks

Question 19 1 / 1 point When the Plan Risk Management process is complete what should you have? Question 20 1 / 1 point What technique uses a “What If” approach in that it seeks to place value on the effect of change of a single variable within a project by analyzing that effect on the project plan? 1) ‐ $ 7,500 (i.e. loss of $ 7,500) 2) $ 25,000 3) $ 7,500 4) $ 32,500 A risk response plan Risk triggers A risk register A risk management plan

Question 21 0 / 1 point There are many inputs to risk management planning. Which one of the following is NOT one of those inputs? Question 22 1 / 1 point Consider the following payoff table where the probabilities of conditions 1 and 2 are unknown: Condition 1 Condition 2 Monte Carlo Analysis Probability Distribution Decision Tress Analysis Sensitivity Analysis 1) The project charter 2) Defined Roles and Responsibilities 3) Expert judgment 4) WBS

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A $10,000 -$2,000 B $5,000 $5,000 C $12,000 -$20,000 D -$15,000 $12,500 If the decision maker is very optimistic what is the option that he would choose? Question 23 1 / 1 point Dave is arguing that a workaround and a contingency plan is the same thing. Why is he not correct? B D C A

Question 24 0 / 1 point 1) A workaround are planned in advance and a contingency plan is not planned for in advance. 2) Dave is correct. Contingency plans and workarounds are the same 3) A contingency plan includes force ‐ majeure events (e.g. natural calamities) whereas a workaround does not 4) A contingency plan is planned in advance and a workaround is not planned for in advance.

Please refer to this Decision Tree which shows the analysis of profit/loss for the two alternatives (i.e. to build or buy). What is the opportunity cost if the project manager decides to build instead of buy Question 25 1 / 1 point Which of these is NOT a valid response to negative risks? 1) $ 1,500 2) $ 5,000 3) $ 3,500 4) ‐ $ 1,500

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Question 26 1 / 1 point You are the project manager of a deep sea oil ‐ exploration project. You know that you cannot plan for all eventualities so you establish a contingency reserve, including amounts for time, money and resources to handle known or unknown risks. This is an example of: 1) Share 2) Mitigate 3) Accept 4) Enhance

Question 27 1 / 1 point Using the Maximax criterion which of the following strategies would be chosen Strategy A B C S1 180 50 120 S2 80 80 80 S3 140 120 ‐ 20 S4 20 40 ‐ 60 1) Risk Avoidance 2) Risk Transfer 3) Improper risk planning because all risks should be properly identified and accounted for. 4) Active Risk Acceptance

Question 28 0 / 1 point Ahmad encounters a risk that he thinks must be brought to the attention of his superiors or at the very least, to the attention of another relevant part of the organization, so that they can deal with it? Why would Ahmad feel this way about the particular risk event? 1) S1 2) S4 3) S3 4) S2

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Question 29 1 / 1 point During which stage of Risk planning are risks prioritized based on numerical probability and impact? 1) Because it is necessary to change the condition that causes the risk in order to protect his project objectives from its impact 2) Because the risk event is a threat that is outside of the scope of his project 3) Because it is not his concern and in any case he does not have the resources to deal with the risk himself 4) Because the project team has many other risks to deal with

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Question 30 0 / 1 point You have to develop a website for your project and members of your IT department have no experience in developing websites. You are unsure as to what the website should contain so you choose to outsource the website development to a firm that has a wide experience and knowledge in website development. Which of the following is NOT true as it relates to transferring of risk to a contractor? 1) Perform Qualitative risk analysis 2) Perform Quantitative risk analysis 3) Plan Risk responses 4) Identify Risks

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Question 31 10 / 10 points An oil company is considering making a bid on a shale oil development contract to be awarded by the federal government. The company has decided to bid $210 million. They estimate that they have a 70% chance of winning the contract at this bid. If the firm wins the contract, management has three alternatives for processing the shale. It can develop a new method for extracting the oil, use the present process, or ship the shale overseas for processing. The development cost of a new process is $30 million. The outcomes and probabilities associated with developing the new method are as follows: Event Probability Financial Outcome ($ millions) Extremely Successful 0.7 450 Moderately Successful 0.2 200 Failure 0.1 20 The present method costs $7 million, and the outcomes and probabilities for this alternative are given as follows: Event Probability Financial Outcome ($ millions) Extremely successful 0.6 300 Done 1) Cost reimbursable contract helps reduce cost if there are mid ‐ project changes 2) Fixed price contracts is best suited to transfer risk to the seller when the design specifications are vague 3) Cost reimbursable contracts leave more of the risk with the customer than with the sub ‐ contractors 4) Transferring risk requires payment of a risk premium

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Moderately successful 0.2 200 Failure 0.2 40 The cost of processing the shale overseas is $5 million. If the shale is shipped overseas, a return of $230 million is guaranteed. Construct a decision tree for this problem and determine the optimal decision strategy. To construct the decision tree and determine the optimal decision strategy, we need to calculate the expected value for each alternative and choose the one with the highest expected value. Let's build the decision tree step by step: ***Assumption: The faliure financial outcome is also takes as positive value as it is given in positive number*** Step 1: Represent the decision nodes and chance nodes. Decision Node: To Bid Chance Node 1: Win (70% chance) Chance Node 2a: Develop New Method Chance Node 2b: Use Present Method Chance Node 2c: Ship Overseas Step 2: Calculate the expected values for each alternative. For Chance Node 2a (Develop New Method): Expected Value = (0.7 * $450) + (0.2 * $200) + (0.1 * $20) ‐ $30 (development cost) Expected Value = $315 + $40 + $2 ‐ $30 Expected Value = $327 million For Chance Node 2b (Use Present Method): Expected Value = (0.6 * $300) + (0.2 * $200) + (0.2 * $40) ‐ $7 (processing cost)

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Question 32 5 / 10 points Kaushik and Paulo are young entrepreneurs. They have a bit of money and have decided to open a community pool facility which would have several pools. On e pool would enable swimming, one pool would be for little children, one pool would be heated for other leisure activities, and there would also be a family sized Jacuzzi. They plan to build the pool facility in the car park area at south eastern end of the Pickering Town Center. This is within easy walking distance from the entrance to The Bay, and not too far from Centennial College's Pickering Learning Center and the bridge that goes across the 401 to connect with the GO buses and trains. They also recognize that the Town of Pickering's Recreation Center is nearby and that there is a pool at that facility. They also recognize that they must get Expected Value = $180 + $40 + $8 ‐ $7 Expected Value = $221 million For Chance Node 2c (Ship Overseas): Expected Value = $230 million (guaranteed return) ‐ $5 (shipping cost) Expected Value = $225 million Step 3: Calculate the expected value at the Chance Node 1 (Win) Expected Value at Chance Node 1 (Win): Probability * highest expected value alternative Expected Value = (0.7 * $327) Expected Value = $228.9 Expected Value = $228.9 million Step 4: Determine the optimal decision strategy: The optimal decision strategy is to "To Bid" with the new development method as it has the highest expected value of Expected Value = $327 million

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approvals from both the Town of Pickering and from the owners of the Pickering Mall. They also assume that if their personal funds are not enough to complete the project that they can get additional funding from their bank. In any case they hope to have the pool facility ready by the middle of August 2020 so that they can capture a part of the recreation market during the warm summer months as this is the peak season for recreational activities. They know that they would need an aggressive construction schedule, but they are hoping for the best. Before embarking on the project however they hire you to do a risk assessment for the project. They also request that your assessment include events that could happen during the first 3 years of the pool’s operation. Develop a risk register that considers at least 12 risk events, their risk categories and what would trigger them. After doing a qualitative and quantitative assessment, determine what the top 5 risk events would be. What would be the type of responses for those top 5 events and indicate precisely what the responses would be. You can use the HTML Editor to enter your answer in a table. Ask me how. Risk Events: Regulatory Approval Delays • Risk Category: Legal and Regulatory • Trigger: Rejection or delay in obtaining approvals from Town of Pickering or Pickering Mall owners. Construction Delays • Risk Category: Project Management • Trigger: Poor weather conditions, supply chain disruptions, or labour strikes causing construction to fall behind schedule. Insufficient Funding • Risk Category: Financial • Trigger: Project costs exceed available funds, requiring additional funding from the bank. Competitive Pressure • Risk Category: Market and Competition • Trigger: Other nearby recreation centres offer similar or better facilities, impacting customer turnout. Equipment and Facility Malfunctions • Risk Category: Operational • Trigger: Technical glitches or breakdowns in pool systems, heating, or Jacuzzi mechanics.

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Low Customer Footfall • Risk Category: Market and Demand • Trigger: Inadequate marketing efforts, unanticipated low interest, or negative reviews affecting customer visits. Staff Shortages • Risk Category: Human Resources • Trigger: Difficulty in recruiting and retaining qualified lifeguards, maintenance staff, and instructors. Safety Incidents • Risk Category: Health and Safety • Trigger: Accidents, injuries, or health concerns occurring within the facility premises. Public Health Concerns (e.g., Pandemic) • Risk Category: External • Trigger: Outbreaks of diseases affecting public health and necessitating temporary closure. Unforeseen Maintenance Costs • Risk Category: Financial • Trigger: Unexpected repairs or maintenance needs beyond the allocated budget. Lack of Customer Interest in Off-Peak Seasons • Risk Category: Market and Demand • Trigger: Reduced customer turnout during non-summer months. Legal Disputes • Risk Category: Legal and Regulatory • Trigger: Lawsuits or legal conflicts with customers, suppliers, or competitors. Top 5 risk events based on qualitative and quantitative assessment: Top 5 Risk Events: • Regulatory Approval Delays • Construction Delays • Insufficient Funding • Equipment and Facility Malfunctions • Low Customer Footfall For the top 5 risk events, here are the recommended type of responses and their specific actions: Regulatory Approval Delays:

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• Response: Mitigation • Actions: Engage with local authorities early, provide all required documentation promptly, and actively follow up on the approval process. Construction Delays: • Response: Contingency • Actions: Build buffer time into the construction schedule, closely monitor progress, and maintain open communication with contractors. Insufficient Funding: • Response: Transfer • Actions: Secure a flexible line of credit from the bank, explore potential investors, or seek additional funding sources. Equipment and Facility Malfunctions: • Response: Prevention and Mitigation • Actions: Regular maintenance schedules, quality assurance checks, and training staff for quick response to technical issues. Low Customer Footfall: • Response: Acceptance • Actions: Plan for off-peak promotions, offer loyalty programs, and diversify activities to attract a wider customer base.

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