MGT415MTX-2024
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Athens State University *
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Course
415
Subject
Health Science
Date
Feb 20, 2024
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4
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Page 1 of 4 Please answer all questions before logging online to the Answer Sheet Form. MG 415 Technical Risk Management – MIDTERM © February
20
24
- Dr. J. Wayne McCain – Athens, AL Name _________________________________________________________ Term _________________ *** Answer all questions on question sheets then transfer your answers to the online Answer Sheet Form. Please do your own work! *** 1. The essence of risk management is to increase risk exposure rather than recover from perils.
A. True B. False 2. Technical risk management must be administered from 'the top down' to be successful.
A. True B. False 3. The Binomial Distribution probabilities are akin to:
A. the Normal Distribution B. the Poisson Distribution but inverted C. sampling with replacement D. sampling without replacement 4. Peril recovery does not usually require corrective action.
A. True B. False 5. It is unlikely that 'concatenation' of several technical issues lead to the Challenger accident.
A. True B. False 6. The ‘window of opportunity’ to effect significant risk avoidance normally occurs
A. late in the program life cycle. B. In the middle of a program. C. Early in the program life cycle. D. Throughout the program. E. None of these. 7. The risk avoidance cost profile and the risk avoidance opportunity profile are essentially reciprocal
functions (refer to 'window of opportunity' in overview PPT). A. True B. False 8. Intrinsic factors (internal) are those management has little influence over.
A. True B. False 9. ______ relates the probabilistic nature of risk to the impact on schedule time caused by corrective action.
A. Risk Cost B. Risk time C. Peril D. MTBF E. RSS 10. A risk network approach can often be used to
A. Expand a simple subsystem B. Find the 'mean time between failures' C. Define baseline cost D. Simplify complex combinations of subsystems 11. Heuristics is a method of solution: A. based on deterministic equations.
B. ‘closed-end’. C. employs ‘rules of thumb’. D. based on probabilistic functions. E. None of these.
Page 2 of 4 Please answer all questions before logging online to the Answer Sheet Form. 12. Risk management is a process of handling risk in a 'conscious fashion' rather than being 'controlled by
events'. A. True B. False 13. Replacement cost is frequently used instead of 'corrective action cost' in figuring risk cost.
A. True B. False 14. A learning curve usually predicts a decrease in labor required to complete a given task with increased
experience. A. True B. False 15. If the calculated risk exposure is $2.4M, then according to our ‘rule of thumb’ one should invest ___ in
risk avoidance. A. $5.2M B. $1.3M C. $600K D. $325K E. None of these 16. Risk Avoidance entails all but which of the following: A. identification of uncertainties
B. action to eliminate uncertainties C. uncertainty quantification D. risk recovery 17. If two components are in series and each has a 0.8 reliability, the equivalent RDF is 0.36.
A. True B. False 18. If a failure is a certainty, then the RDF=1.0 [risk determinant factor is the RDF]
A. True B. False 19. Risk cannot be numerically assessed, rather it is a 'qualitative' characteristic only.
A. True B. Falsse 20. Corrective action (during recovery) usually costs more than risk avoidance. A. True B. False
21. The area to the right of the mean under the standard normal curve is: A. 1.0 B. >1 C. zero .
D. 0.5 22. The effects of 9-11 have had no effect on how managers view risk. A. True B. False
23. If the probability of failure ‘p’ is 0.25, then the probability of success is
A. 1/p B. 1+p C. 0.75 D. 4 E. none of these 24. For a probability distribution, the sum of all possible outcomes must equal
A. zero B. 1.0 C. area outside the corresponding Venn diagram D. less than zero 25. Risk management is practiced for more than hardware related products. A. True
B. False 26. Most, if not all, real-world decisionmaking problems are characterized by multiple, noncommensurate, and
often conflicting, objectives. A. True B. False 27. Fault tree analysis decomposes the overall reliability problem into several levels the systematically
calculates the failure rate of the overall (top) event from the lower level to the upper level. A. True B. False 28. Fishbone diagrams enable one to focus on key areas that contribute to an operation's success.
A. True B. False 29. Serial combinations in a risk network represent a form of 'redundancy'. A. True
B. False
Page 3 of 4 Please answer all questions before logging online to the Answer Sheet Form. 30. If the probability of finishing a risk network on schedule is 0.65 and the cost penalty for late
performance is $350K, then what is the risk cost [nearest $k]? A. $384K B. $163K C. $88K D. $123K E. None of these 31. If the corrective action time is estimated at 30 days, what is the risk time [nearest day]?
A. 11 days B. 19 days C. 41 days D. unknown [ref: problem 30 information] 32. A ‘paradigm’ is a lens through which we see the universe.
A. True B. False 33. The proper amount to invest in ‘risk avoidance‘ is [using the rule of thumb]:
A. $6K B. $31K C. $63K D. $24K [ref: answer for problem 30 34. The failure rate is the square root of the MTBF. A. True
B. False 35. If the MTBF is 60 hours, the failure rate is (per hour)
A. 0.750 B. 0.001 C. 0.017 D. zero 36. One might expect risk to decline as a process matures (inverse
relationship). A. True B. False 37. An RDF of 0.95 indicates more risk than a RDF of 0.5 [risk exposure].
A. True B. False 38. For a standard shuffled card deck, the probability of drawing 3 aces in a row is less than 1/1000.
A. True B. False 39. In the axiom “an apple a day keeps the doctor away” if a doctor visit costs $125 on average, at what cost per
apple would the practice of this ritual exhibit diminishing returns for a 1-year [365 days] period? A. $0.14 B. <$0.21 C. >$0.34 D. $0.23 E. >$0.55 40. Technical Risk Management is a basic ‘executive function’. A. True B. False
41. Risk Management can be practiced for: A. Performance
B. Cost C. Schedule D. All of these E. None of these 42. Once risk events have been identified, the next step is to determine a risk handling approach.
A. True B. False 43. As the RDF increases, the measure of risk exposure is affected : A. inversely B. directly C. not at all
44. The Normal (Gaussian) Probability Distribution is a continuous distribution rather than a discrete one as
in the Binomial and Poisson Distributions. A. True B. False
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Page 4 of 4 PARADISE FOUND? A real estate developer has the option to purchase a tract of land near a proposed ‘supermall’ location. Her vision is to design a ‘planned’ community that integrates the neighborhood with the shopping and recreational opportunities of the new mall. *
Statistically, the probability of the mall project
materializing [probability of success] is estimated at 0.90 •
The developer must pay $300K per acre for the 100-acre tract
45. What is the developer’s risk cost if she proceeds immediately to purchase the tract of property?
A. $1.4M B. $1.0M C. $0.4M D. $2.0M E. $3.0M 46. What is the Risk Determinant Factor (RDF) associated with this project?
A. 0.9 B. 0.1 C. 1-0.1 D. 1/4 47. Using the info from [45], what is the RCE [Risk Cost Estimate]* associated with this endeavor?
A. $100.2M B. $2.1M C. $30.3M D. $750K E. $20.4M 48. Using the Probability Distribution Calculator from our web site, what is the Binomial Probability of 3 or
fewer successes when n=20 and p=0.2? A. 0.0115 B. 0.4114 C. 1.000 D. 0.9999 E. 0.9679 49. Assuming that the current faculty of ASU is 100, the rate of increase due to new hiring has been 0.04, and
the rate of leaving the university (including retirements) has been 0.01; how many faculty will be at the university in 15 years? (reference example 4.8.2.2 and round to nearest person) A. 105 B. 156 C. 175 D. 225 E. 189 50. Technical risk management involves risk planning, risk assessment, risk handling, and risk monitoring.
A. True B. False * RCE = BC * (1 + RDF)