Practice Test

True or False: The RBS in risk management stands for Risk Boundary System.

  • True
  • False

Answer: False

Explanation: RBS in risk management stands for Risk Breakdown Structure. It is a hierarchical representation of risks, organized by category and sub-category that assists in understanding the nature of the risks.

Which among the following is NOT a common category in the Risk Breakdown Structure?

  • A) Environment
  • B) Project Management
  • C) Organizational
  • D) Technical
  • E) Holiday Plan

Answer: E) Holiday Plan

Explanation: Holiday Plan is not a valid category in Risk Breakdown Structure. The common categories include Environment, Project Management, Organizational and Technical.

True or False: The risk management plan does not include classifications from the Risk Breakdown Structure.

  • True
  • False

Answer: False

Explanation: The risk management plan definitely includes classifications from the Risk Breakdown Structure (RBS). They form the basis for risk categorization in the plan.

What does a “Nominal Classification” in risk management refer to?

  • A) Sorting risks based on their names
  • B) Assigning risks to broad categories based on common characteristics
  • C) Providing a nominal fee for resolving the risk
  • D) Labeling risks as high, medium, or low risk

Answer: B) Assigning risks to broad categories based on common characteristics

Explanation: In risk management, a nominal classification refers to grouping risks into broad categories based on the nature of the risk, helping to simplify their management.

Multiple choice: Which of the following would most likely fall under the category of “Organisational Risk” in the Risk Breakdown Structure?

  • A) Changes in company leadership
  • B) Faulty software
  • C) Severe weather conditions
  • D) Lack of project funding

Answer: A) Changes in company leadership and D) Lack of project funding

Explanation: Changes in company leadership and insufficient project funding are issues related to the organization, thus falling under Organizational Risk category.

Is conducting a risk breakdown structure (RBS) mandatory for every risk management process?

  • True
  • False

Answer: False

Explanation: Although, Risk Breakdown Structure (RBS) is widely used and extremely beneficial, it’s not mandatory for every risk management process.

True or False: Nominal classification of risks allows for detailed risk analysis.

  • True
  • False

Answer: False

Explanation: Nominal classification essentially places risks into categories without any ranking or prioritization. They are merely grouped by common characteristics, and it doesn’t allow for a detailed risk analysis.

Which of the following classification of risk breakdown structure concerns the likelihood of encountering technical problems during project implementation?

  • A) Organizational
  • B) Environment
  • C) Project Management
  • D) Technical

Answer: D) Technical

Explanation: Technical risk involves the possibility of encountering technical difficulties or issues that could obstruct the progress of the project.

In the Risk Breakdown Structure, are risks categorized based on their severity?

  • True
  • False

Answer: False

Explanation: In the Risk Breakdown Structure, risks are categorized based on nature or sources not their severity. This system allows for easier risk management and understanding.

Multiple choice: Which of the following would most likely fall under the category of “Environmental Risk” in the Risk Breakdown Structure?

  • A) Changes in regulatory policies
  • B) Cyber threats
  • C) Budget constraints
  • D) A labor shortage

Answer: A) Changes in regulatory policies

Explanation: Changes in regulatory policies are linked to environmental conditions as the environment in this context includes business, regulatory, and physical environments.

Which of the following is an example of project management risk?

  • A) Changes in market trends
  • B) Budget Overruns
  • C) Competition
  • D) Political instability

Answer: B) Budget Overruns

Explanation: Project management risks are often internal and can result from inaccurate estimating, inadequate scheduling, or lack of defined project objectives. Thus, budget overruns could be seen as a project management risk.

The hierarchical way of displaying identified risks is called:

  • A) Risk Matrix
  • B) Risk Register
  • C) Risk Breakdown Structure
  • D) Risk Graph

Answer: C) Risk Breakdown Structure

Explanation: Risk Breakdown Structure (RBS) is a hierarchical arrangement that visually represents all the identified risks for a project.

True or False: External factors like market volatility and political instability fall under the ‘Environment’ category in the Risk Breakdown Structure.

  • True
  • False

Answer: True

Explanation: The ‘Environment’ category in the RBS often includes factors outside the project’s internal environment like market volatility, political instability etc.

In nominal classification of risks, ranking of risks according to their potential impact to the project is considered.

  • True
  • False

Answer: False

Explanation: Nominal classification is about grouping risks based on shared characteristics without considering their severity or impact.

Multiple select: Which are the common classifications for risks in the Risk Breakdown Structure (RBS)?

  • A) Phase based risk
  • B) Technical
  • C) Organizational
  • D) Environment

Answer: B) Technical, C) Organizational and D) Environment

Explanation: Common classifications for risks in the Risk Breakdown Structure (RBS) include Environment, Organizational, Technical and sometimes Project specific or phase based classification.

Interview Questions

What does RBS stand for in the context of risk management?

RBS stands for Risk Breakdown Structure. It is a hierarchical representation of risks, usually organized by category.

What is the purpose of performing a nominal classification of risks in the RBS?

The purpose of performing a nominal classification of risks in the RBS is to categorize and organize risks into logical and manageable groups. This will facilitate better understanding, communication, and management of these risks.

Which factors might be included in the risk management plan for use in classification within the RBS?

The factors that might be included in the risk management plan for use in classification within the RBS includes environmental factors, organizational factors, project management factors, technical factors, and other categories associated with the project.

What are environmental risks in the context of a Risk Breakdown Structure?

Environmental risks are threats associated with external conditions or circumstances that could affect the outcome of the project, such as political changes, regulatory changes, or natural disasters.

What are organizational risks in the context of an RBS?

Organizational risks relate to potential threats associated with the organization’s structure, culture, or internal systems, which may impact the success of the project. This could include lack of resources, ineffective communication or decision-making processes.

What constitutes project management risks in a Risk Breakdown Structure?

Project management risks relate to the process of managing the project itself. These may include planning errors, scope creep, incorrect estimations of cost or time, or ineffective leadership.

What types of risks are classified as technical risks?

Technical risks are associated with the technology, systems, methods, or tasks associated with the project. These may include errors in system design or implementation, rapid technological obsolescence, or issues with integration of different technical components.

How do you construct and use Risk Breakdown Structure?

The Risk Breakdown Structure is constructed by identifying potential risks, categorizing them based on their features into pre-established classifications (e.g. environmental, organizational, technical etc), and structuring them hierarchically from most general to most specific. It is used to facilitate risk analysis, communication and management.

How can the RBS facilitate risk analysis?

The RBS, by organizing risks in a hierarchical structure, can help to identify patterns, dependencies, and areas of particular risk concentration. It can also highlight where insufficient information may exist, prompting further investigation.

What part of risk planning is the nominal classification of risks part of in the RBS?

The nominal classification of risks in RBS is part of the risk identification process which happens in the risk planning phase of the project. It aids in understanding the categories and potential sources of risks that could affect the project.

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