Task 3 Confirm Risk Thresholds Based on Risk Appetites PMI-RMP Practice Questions (Page 1)

Questions 1–5

1. 1application · medium

   Two project stakeholders have conflicting views on the risk threshold for cost overruns. The finance director wants a low threshold to protect the budget, while the project sponsor wants a high threshold to allow for innovation. The project manager needs to lead a conflict resolution session. What is the first step the project manager should take?

   • AImmediately propose a compromise threshold that is midway between the two positions.
   • BAsk each stakeholder to present their rationale and supporting data.
   • CRefer the issue to the project management office for a standard threshold.
   • DDecide the threshold based on the project manager's own judgment.
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2. 2application · medium

   A construction company is evaluating a large infrastructure project. The CFO wants to know how much financial risk the organization can absorb if the project experiences cost overruns. The company has a strong balance sheet, but it also has several other ongoing projects that could be affected. What is the most appropriate way to calculate the organization's risk absorption capacity for this project?

   • ACalculate the total available financial reserves and credit capacity that can be allocated to cover potential losses.
   • BUse the project's contingency reserve as the primary measure of absorption capacity.
   • CBase the absorption capacity on the historical average cost overrun percentage from past projects.
   • DSet the absorption capacity equal to the project's total budget, since the organization can always reallocate funds.
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4. 3foundation · easy

   When stakeholders disagree on the appropriate risk threshold for a project, what is a recommended conflict resolution technique?

   • ALet the most senior stakeholder decide unilaterally.
   • BAvoid the discussion and proceed with the project manager's preferred threshold.
   • CEscalate the issue to the project sponsor without discussion.
   • DFacilitate a discussion to find a consensus based on the organization's risk appetite and project objectives.
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5. 4foundation · easy

   When setting risk thresholds for a project, what should the project manager do to ensure alignment with the organization's risk appetite?

   • ASet thresholds based on the project manager's personal risk tolerance.
   • BUse the same thresholds for all projects regardless of size or complexity.
   • CAlign thresholds with the organization's risk appetite as defined in its risk management policy.
   • DSet thresholds to minimize all risks to the lowest possible level.
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6. 5foundation · easy

   What is the primary purpose of defining risk thresholds in a project?

   • ATo eliminate all risks from the project.
   • BTo assign risk ownership to specific team members.
   • CTo document risks in the risk register.
   • DTo provide clear criteria for when a risk requires a response or escalation.
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