Practice Test

True or False: The portfolio risk management plan involves identifying possible risks and addressing them before they become issues.

  • True
  • False

Answer: True

Explanation: A significant aspect of the portfolio risk management plan involves the identification and preemptive management of potential risks to maximize opportunities and minimize losses.

The portfolio risk management plan should be carried out in conjunction with:

  • a) The project management team.
  • b) The financial consultants.
  • c) The stakeholders.
  • d) All of the above.

Answer: d) All of the above.

Explanation: The portfolio risk management plan involves the collaboration of all key stakeholders, including the project management team and the financial consultants.

True or False: Governance risk guidelines are optional in developing a portfolio risk management plan.

  • True
  • False

Answer: False.

Explanation: Governance risk guidelines are vital in developing a portfolio risk management plan as they provide an organized approach to manage potential risks.

Using organizational assets in developing the portfolio risk management plan is:

  • a) Not related.
  • b) A necessity.
  • c) Optional.

Answer: b) A necessity.

Explanation: Utilizing organizational assets can be a significant advantage in developing the portfolio risk management plan as they often contain valuable knowledge and insights about potential risks.

A robust portfolio risk management plan will:

  • a) Eliminate all possible risks.
  • b) Minimize the impact of risks.
  • c) Increase the impact of risks.

Answer: b) Minimize the impact of risks.

Explanation: A main objective of a portfolio risk management plan is to decrease potential losses by identifying and managing risks effectively.

True or False: In portfolio risk management, all risks should be treated as threats.

  • True
  • False

Answer: False.

Explanation: In portfolio risk management, risks can also be seen as opportunities. The key is understanding and managing them effectively.

The output of portfolio risk management planning will be:

  • a) A detailed documentation of all identified risks.
  • b) Strategies to deal with each identified risk.
  • c) Both (a) and (b).

Answer: c) Both a) and b).

Explanation: The output of risk management planning includes both the identification of risks and strategies on how to address them.

True or False: Developing a portfolio risk management plan is a one-time activity.

  • True
  • False

Answer: False.

Explanation: Portfolio risk management planning is an ongoing activity, as risks and opportunities can change over time.

The best time to conduct risk identification in portfolio management is:

  • a) At the beginning of the project.
  • b) Throughout the lifecycle of the project.
  • c) Only when problems arise.

Answer: b) Throughout the lifecycle of the project.

Explanation: Risk identification should be an ongoing process, as new risks may emerge or existing ones may evolve throughout the project.

Who is responsible for monitoring and controlling risks once the portfolio risk management plan is in place?

  • a) The project portfolio manager.
  • b) The stakeholders.
  • c) The project team.
  • d) All of the above.

Answer: d) All of the above.

Explanation: Everyone involved in the project has a role in monitoring and controlling risks to ensure the plan is being executed effectively.

Interview Questions

What techniques are used to evaluate an organization’s strategic goals and objectives?

These techniques include document reviews, interviewing key stakeholders, surveys, questionnaires, and analysis of organizational performance data.

How can interviews aid in understanding an organization’s strategic priorities?

Interviews provide qualitative data directly from those involved in strategic decision-making. These insights can clarify goals, objectives, and associated challenges, which may not be clearly articulated in written documents.

Why is review of existing documents important in evaluating strategic goals?

Document reviews give a snapshot of the organization’s existing strategy, identifying established goals and objectives, tracking past performances and charting growth plans or any strategic shifts.

What is the role of information gathering techniques in evaluation of strategic priorities?

They provide data-based evidence to support decision-making processes, reveal alignment with goals and objectives, identify strengths, weaknesses, opportunities and threats, and foster insight into areas for strategy refinement.

What is the importance of understanding the strategic priorities in an organization?

It facilitates alignment of resources with objectives, aids in performance tracking, assists in risk anticipation & management, and helps ensure the portfolio aligns with the organization’s strategic direction.

How can an organization’s mission and vision statements aid in understanding its strategic objectives?

These statements provide the organization’s overarching goal and the path it intends to follow, offering a framework within which specific strategic objectives are designed.

What are some methods of gathering information for strategic evaluation besides document reviews and interviews?

Other methods may include focus groups, surveys, workshops, market research, benchmarking studies, and SWOT analysis.

How does understanding strategic priorities aid in portfolio management?

It ensures that the portfolio aligns with the company’s strategic goals, projects undertaken are relevant and important to the organization’s strategic context, and resources are properly allocated to produce maximum return on investment.

What is the relationship between an organization’s strategic priorities and portfolio management?

Strategic priorities should guide the selection, management, and evaluation of projects within the portfolio. The portfolio should reflect these priorities and contribute meaningfully towards their achievement.

Why should strategic goals and objectives be reviewed regularly?

Regular review ensures they remain relevant and aligned with organizational realities and market conditions. It allows for necessary adjustments in response to performance data or changed circumstances.

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