Practice Test

True or False: Technological risks is a category of risk in project risk management.

  • True
  • False

Answer: True

Explanation: Technological risk is a recognized category that refers to risks associated with the implementation and use of technology within a project.

Which of the following is not a category of risk in project management?

  • A. Operational Risk
  • B. Compliance Risk
  • C. Market Risk
  • D. Culinary Risk

Answer: D. Culinary Risk

Explanation: Although Operational, Compliance, and Market risks are recognized categories of project management risk, Culinary Risk is not related to project management risk categorization.

True or False: Financial risks include changes in market trends, fluctuations in currency exchange rates, and changes in interest rates.

  • True
  • False

Answer: True

Explanation: Financial risks refer to changes and instability in the economic environment, which do indeed include fluctuations in currency exchange rates, interest rates, and market trends.

Multiple Select: Select all that apply. What categories of risk classified under PMI Risk Management?

  • A. Strategic Risk
  • B. Operational Risk
  • C. Legal Risk
  • D. Reputation Risk

Answer: A. Strategic Risk, B. Operational Risk, C. Legal Risk

Explanation: According to PMI, Risk categories include Strategic, Operational and Legal. Reputation Risk is not explicitly identified as a risk category by PMI.

True or False: Schedule risk is a category under Project Management Risk.

  • True
  • False

Answer: True

Explanation: Schedule risk involves uncertainties in the project timeline, including delays and extensions, which is indeed a recognized category of risk in project management.

Which of the following is not a risk category in project management?

  • A. Environmental Risk
  • B. Political Risk
  • C. Costume Risk
  • D. Regulatory Risk

Answer: C. Costume Risk

Explanation: Environmental, Political, and Regulatory Risks are recognized categories of project management risk, while Costume Risk is not.

Multiple Select: According to PMI, which of the following are risk categories?

  • A. Legal
  • B. Technological
  • C. Environmental
  • D. Infrastructure

Answer: A. Legal, B. Technological, C. Environmental

Explanation: Legal, Technological, and Environmental are all recognized as risk categories by PMI. Infrastructure is crucial for project delivery but is not a specific risk category by PMI.

True or False: Commercial risks include supplier failure, product failure and fluctuations in market demand.

  • True
  • False

Answer: True

Explanation: Commercial risks are uncertainties in the commercial environment, including supplier failure, product failure, and variations in market demand.

Which of the following is a type of operational risk in project management?

  • A. Currency exchange rate fluctuations
  • B. Regulatory changes
  • C. Earthquakes
  • D. Equipment failure

Answer: D. Equipment failure

Explanation: Equipment failure represents a direct threat to the operation of a project and is therefore classified under operational risk.

True or False: Strategic risks include changes in government policy that can impact the project.

  • True
  • False

Answer: True

Explanation: Strategic risks refer to uncertainties and potential problems that can affect the strategic direction and aims of a project, including changes in government policy.

Interview Questions

What are the primary risk categories that need to be identified in a project?

The primary risk categories that need to be identified in a project include technical risks, management risks, commercial risks, legal risks, and external risks.

Could you define technical risks?

Technical risks involve possible technology failures, implementation issues, or unforeseen problems that result from the project’s technical complexity.

What constitutes management risks?

Management risks are potential issues that could arise and affect the project due to management decisions, strategies, and changes. These include risks associated with project planning, control, and organization.

How can commercial risks be categorised?

Commercial risks can be categorised into market risks, financial risks, and business risks.

What are legal risks in a project context?

Legal risks refer to potential legal actions or disputes that could arise during the course of the project. These could include regulatory issues, contractual disputes, or copyright infringement.

Can you define external risks?

External risks are events that are outside of the project team’s control like natural disasters, political upheaval, or market fluctuations, which can impact the project’s progress, objectives, or deliverables.

Are people risks part of risk categories?

Yes, people or personnel risks are part of risk categories. These are risks that stem from people involved in the project such as issues with skills or knowledge, turnover, or conflicts.

Can you describe resource-related risks?

Resource-related risks relate to the potential for loss or depletion of the resources required for the project, including both human and material resources.

Why is it necessary to identify risk categories in project management?

Identifying risk categories allows project managers to predict and mitigate potential obstacles that could derail the project timeline, budget, or quality.

Can you give me an example of process-related risk?

An example of process-related risk could be a new software development methodology that has not been previously used by the project team, presenting risk in its initial implementation and execution.

How would you categorize a risk as a financial risk?

A risk could be categorized as a financial risk if it has the potential to impact the budget or financial projections of the project, such as unexpected cost increases or delays that require additional funding.

How are risk categories used in risk assessment?

Risk categories are used in risk assessment to determine the source or cause of risks which would inform the development of risk mitigation strategies.

Are environmental risks included in risk categories?

Yes, environmental risks are part of risk categories. These are typically external risks and refer to environmental conditions or events like natural disasters, extreme weather conditions, or environmental regulations that could impact the project.

What are the benefits of correctly identifying risk categories?

Correctly identifying risk categories helps in formulating effective risk response strategies, improves decision making, and enhances the overall management of the project by setting a clear path to address each type of risk.

Are quality risks a part of risk categories?

Yes, quality risks are part of risk categories. They relate to potential issues that could impact the quality of the project output, such as non-compliance with standards, defects in output, or deviations from quality requirements.

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