Concepts
The PMI Risk Management Professional (PMI-RMP) exam is no small feat. This credential is intended for those who seek to demonstrate their expertise in identifying project risks and mitigating threats, while taking advantage of opportunities. The exam covers various topics ranging from risk strategy and planning to stakeholder engagement and risk process facilitation. Today we will delve into the following key topics: Agreed-upon assessment approach, Historical Information, Definitions of Probability and Impact, Risk Categories and Pre-established Criteria.
1. The Agreed-Upon Assessment Approach
The agreed-upon assessment approach is fundamental in ensuring that all stakeholders have a common understanding of how the risks should be evaluated, rated, and prioritised. The approach is generally documented in the risk management plan, providing the foundation in how risks should be handled throughout the project lifecycle.
The approach can include ranking methods for risks based on their probability and impact, both quantitatively and qualitatively. For instance, one such method includes rating each risk on a scale from 1-10 for both probability and impact. Once the risk is scored, these numbers may be multiplied to provide a risk index which can direct the level of attention required for the particular risk.
2. Historical Information
Historical information involved in risk management falls into the category of organizational process assets. This information is valuable as it helps project teams learn from past projects.
The types of information may include data from prior similar projects, such as a list of potential risks, their likelihood of occurrence, impacts, and how they were addressed. It may also include risk management templates, checklists and lessons learned, which could help to inform your current approach to risk management and avoid repetition of past mistakes.
3. Probability and Impact
Both probability and impact are key aspects of risk ranking. Each risk should be evaluated based on these two components:
- Probability: It is the likelihood or chance that a risk event will occur. It can be expressed on a scale from zero percent (no chance) to a hundred percent (certainty).
- Impact: The extent of damage or benefit that can arise if a risk occurs. It can be expressed in different units such as monetary value, time, or other project objectives.
4. Risk Categories
Risk categories serve as a tool to group individual project risks into segments. Risk categories offer an efficient structure to identify and communicate risks. A common method includes using a risk breakdown structure (RBS) which could be divided into categories such as technical, external, organizational, and project management layers.
5. Pre-Established Criteria
Pre-established criteria are used for defining the boundaries within which risks are assessed and responses are developed. This includes triggers, risk tolerance, risk appetite, and thresholds.
In conclusion, a thorough understanding of these topics forms the foundation for comprehensively managing risks on projects. Remember, risk is not always a threat, it can also be an opportunity if properly managed. Your ability to anticipate and manage risks can directly impact your project’s success and your credibility as a PMI-RMP. Good luck with your studies and exam preparation!
Answer the Questions in Comment Section
True/False: In the agreed-upon assessment approach, it is not necessary for all stakeholders to agree on the approach to assessing risks.
- True
- False
Answer: False
Explanation: The agreed-upon assessment approach requires consensus among all stakeholders on the method used to evaluate risk. This promotes common understanding and reduces ambiguity in risk analysis.
Multiple Select: Which of the following are considered part of historical information used in risk management?
- a) Past project performance
- b) Historical risk databases
- c) Lessons learned reports
- d) Employee performance reviews
Answer: a,b,c
Explanation: Historical risk databases, past project performances, and lessons learned reports are all examples of historical information used in project risk management. Employee performance reviews are not typically used as historical information for this process.
Single Select: Which of the following best defines the concept of risk impact?
- a) The chance of a risk occurring
- b) The severity of the consequences if a risk occurs
- c) The identification of potential risks
- d) The planning to mitigate risks
Answer: b
Explanation: The impact of a risk refers to the potential severity of the consequences should the risk occur. Other options relate to the probability, identification, and response planning of a risk.
True/False: Definitions of probability and impact are uniform across industries.
- True
- False
Answer: False
Explanation: The definitions of probability and impact often vary across industries and organizations based on the nature and complexity of the projects they undertake.
Single Select: The risk categories in a risk breakdown structure (RBS) are:
- a) Identified by the project manager alone
- b) Decided upon by the project team
- c) Pre-established and universally applicable
- d) Specific to the organization
Answer: d
Explanation: Risk categories are typically specific to the organization and the type of projects they undertake. This ensures that the risks identified align with the organization’s objectives and areas of concern.
Multiple Select: Pre-established criteria often include:
- a) Risk identification methods
- b) Assessment techniques
- c) Tolerance levels
- d) Risk response strategies
Answer: b,c
Explanation: Pre-established criteria often include assessment techniques (how risks will be assessed) and tolerance levels (the acceptable level of risk).
True/False: Historical information is not useful for risk analysis.
- True
- False
Answer: False
Explanation: Historical information, such as reports from previous similar projects, can provide invaluable insights for risk identification, analysis, and response planning.
Single select: ________ helps in making consistent decisions about risks by using predefined criteria.
- a) Historical information
- b) Risk categorization
- c) Agreed-upon risk assessment approach
- d) Definitions of probability and impact
Answer: c
Explanation: The agreed-upon risk assessment approach ensures that all stakeholders have a common understanding of how risks will be assessed, ensuring consistent decision-making.
True/False: The agreed-upon assessment approach includes only qualitative analysis.
- True
- False
Answer: False
Explanation: The agreed-upon assessment approach can include both qualitative and quantitative analysis, depending on the needs and nature of the project.
True/False: Risk categories are fixed and universally applicable to all projects.
- True
- False
Answer: False
Explanation: Risk categories can vary from one project to another and might also differ from organization to organization. They are customized to suit the project’s requirements, and hence are not universally applicable.
Multiple select: Definitions of probability might include:
- a) A numerical rating
- b) A qualitative description
- c) A list of relevant stakeholders
- d) A breakdown of risk categories
Answer: a,b
Explanation: Definitions of probability can be expressed both numerically (e.g., 1-10 scale) and qualitatively (“very high”, “medium”, “low”, etc.). They don’t typically include a list of stakeholders or a breakdown of risk categories.
Single Select: Risk categories play a pivotal role in:
- a) Cost estimation
- b) Determining project scope
- c) Resource allocation
- d) Risk identification process
Answer: d
Explanation: Risk categories often serve as a framework to facilitate the risk identification process. They do not directly involve in estimations, scope definition or resource allocation.
This blog post on the PMI-RMP exam topics is really insightful! I appreciate the detailed coverage of agreed-upon assessment approaches.
Can anyone explain how historical information impacts risk management processes?
Thanks for the post! The definitions of probability and impact can be confusing sometimes. This makes it clearer.
I think pre-established criteria are crucial for consistent risk assessments. What does everyone else think?
This blog doesn’t delve deep into risk categories. More information on this would have been beneficial.
Great article! The PMI-RMP exam covers so much ground; it’s good to have a clear understanding of historical information’s role.
Definitions of probability and impact are fundamental to risk assessment. Glad to see them covered here!
How do pre-established criteria differ from agreed-upon assessment approaches?