Practice Test

True or False: Government risks refer to potential losses due to changes in government legislation and policies.

• True
• False

Answer: True

Explanation: Government risks involve changes in government legislation and policies that can affect the project’s outcome, such as new laws, changing policies, and reshuffling of government.

What is organizational risk in the context of project management?

• A. Risk of natural disasters
• B. Risk of changes in management
• C. Risk of change in market laws
• D. Risk of software malfunction

Answer: B. Risk of changes in management

Explanation: Organizational risks refer to those risks associated with the style of project management within the organization. They can include aspects like changes in management, restructuring, or internal politics.

Environmental risks in project management primarily focus on:

• A. Compliance with environmental laws
• B. Natural disasters or extreme weather events
• C. Both A and B
• D. Neither A nor B

Answer: C. Both A and B

Explanation: Environmental risks refer to both natural disasters which can hamper the progress of the project and the need to comply with environmental laws and regulations.

True or False: There is no relationship between market laws and risks in project management.

• True
• False

Answer: False

Explanation: Market laws can significantly affect the project’s success. Changes in market laws can pose a risk if they affect aspects of the project such as cost, timeline, or deliverables.

Technical risks in project management can include:

• A. Changes in software requirements
• B. Technological advancements
• C. Cybersecurity threats
• D. All of the above

Answer: D. All of the above

Explanation: Technical risks refer to uncertainties in technologically intensive systems that can have negative effects on the project outcomes, including software changes, advancements, and threats.

True or False: PMI Risk Management Professional (PMI-RMP) focuses primarily on financial risks.

• True
• False

Answer: False

Explanation: The PMI-RMP certification acknowledges a professional’s ability to identify and assess project risks while mitigating threats and capitalizing on opportunities. It covers more than just financial risks.

Government risks can be avoided through:

• A. Regular monitoring of legislative changes
• B. Hiring knowledgeable local professionals
• C. Both A and B
• D. Neither A nor B

Answer: C. Both A and B

Explanation: Both regular monitoring of legislative changes and hiring knowledgeable local professionals can help in avoiding government risks.

Which of the following is not an example of an organizational risk?

• A. Change in executive leadership
• B. Data breach
• C. Employee turnover
• D. Natural disaster

Answer: D. Natural disaster

Explanation: A natural disaster would fall under environmental risks, not organizational risks.

Which type of risk would potential changes in tariffs and trade agreements fall under?

• A. Technical risks
• B. Market risks
• C. Government risks
• D. Organizational risks

Answer: C. Government risks

Explanation: Changes in tariffs and trade agreements are usually linked to government policies so they would be categorized as government risks.

Which among the following constitutes a technical risk?

• A. Change in government policy
• B. Change in project scope
• C. Software malfunction
• D. Increase in competition

Answer: C. Software malfunction

Explanation: Technical risks are those that are associated with the use of technology in a project, such as software glitches or malfunction.

Interview Questions

What is the principle of the “Government Risks” in the PMI-RMP exam?

The principle of “Government Risks” refers to the adverse impact on a project due to changes in government regulations, rules, and laws.

What is a market risk in project management?

A market risk involves the probability of an investment’s actual returns will significantly differ from expected returns due to changes in market conditions or wrong market predictions.

According to the organizational risk environment, what is risk tolerance?

Risk tolerance is the degree of variability in investment returns that an organization is willing to withstand in their risk management practices. It determines the level of risk the organization can comfortably manage.

How does technical risk affect project management?

Technical risks are associated with the developing technologies involved in the project. Inadequate technical analysis can lead to project failures, cost escalations, and time delays.

How can environmental risks impact a project?

Environmental risks involve unexpected or adverse conditions in the environment that might negatively impact the project. These can include natural disasters, harsh weather conditions, or regulatory changes in environmental law.

What does a regulatory risk pertain to in the context of PMI-RMP?

Regulatory risk pertains to potential losses an organization may suffer due to changes in laws or regulations, or due to non-compliance with existing regulations.

What is the importance of risk management under PMI-RMP?

Risk management is essential as it helps organizations anticipate and mitigate possible adverse events. It ensures efficiency, effectiveness, and consistency in managing risks, deters potential legal actions and safeguards the organization’s reputation.

How do political risks affect project management?

Political risks such as changes in policies, regulations, government instability, and wars can significantly affect the operational, financial, and market performance of a project.

How does a project manager identify a market risk?

A project manager identifies a market risk by conducting a risk identification process which involves market research, SWOT analysis, forecasting, and utilizing specialized risk identification tools and techniques.

What is risk appetite in PMI-RMP?

Risk appetite is the level of risk an organization is prepared to accept to achieve its objectives, before action is deemed necessary to reduce the risk. It is usually measured in terms of potential impact on project objectives.

What are some common organizational risks?

Common organizational risks can include internal changes in management or strategy, workforce changes, restructuring, or other internal disruptions.

How can technical risks be mitigated?

Technical risks can be mitigated by using proven technology, regular quality checks, adhering to technological standards, pilot testing and phased implementation.

What role does risk analysis play in PMI-RMP?

Risk analysis is used to understand the risk events, their relationships, and to evaluate the potential impact on project objectives. It is the basis for risk response, mitigation, or transfer decisions.

What is environmental risk management?

Environmental risk management involves identifying, assessing, and controlling risks arising from operational factors. It could include risks related to pollution, natural disasters, or other environmental conditions.

How can understanding market laws/rules help in managing risks?

Understanding market laws/rules can provide insights into potential regulatory risks, effectively plan for regulatory changes, and stay compliant thereby reducing potential losses and penalties.

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