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6. Explain how to use decision trees and Monte Carlo analysis for quantifying
risk. Give an example of how you could use each technique on an
information technology project.
Figure 11-6 shows an example of using a decision tree with the EMV
calculations. Figure 11-7 shows the results of a Monte Carlo simulation with
Project 2007 to help understand schedule risk.
7. Provide realistic examples of each of the risk response strategies for both
negative and positive risks.
One example for avoiding negative risk might be that you could use an
existing piece of hardware to avoid the risk of waiting for a newer product.
You could take your chances that the new product will be available as an
example of risk acceptance, and if its not, then deal with the problem. You
could make a contractor bear the risk of providing the new hardware on time
or suffer some type of consequences as an example of risk transference. For
risk mitigation, you could lessen the probability of a risk event occurring,
such as moving the date back to be more certain the new hardware will be
available. For positive risk strategies, such as making money on a new
product, you could use risk exploitation by pursuing venture capital, risk
sharing by partnering with another firm, risk enhancement by providing
incentives to make the positive risk happen, and risk acceptance by just
accepting the risk if it occurred.
8. List the tools and techniques for performing risk monitoring and control.
Risk reassessment, risk audits, variance and trend analysis, technical
performance measurement, reserve analysis, and status meetings or
periodic risk reviews are tools and techniques for risk monitoring and control.
9. How can you use Excel to assist in project risk management? What other
software can help project teams make better risk management decisions?
You can use Excel to help calculate risk factors, expected monetary value,
and to perform sensitivity analysis. Other software products that can assist in
risk management include project management software, risk management
software, and simulation software.