PMI Risk Management Professional Practice Exam

What is the process of numerically analyzing the effect of identified risks on overall project objectives called?

1. Perform Qualitative Risk Analysis

2. Perform Quantitative Risk Analysis

3. Risk management planning

4. Risk response planning

The correct answer is: Perform Quantitative Risk Analysis

The process of numerically analyzing the effect of identified risks on overall project objectives is known as Perform Quantitative Risk Analysis. This phase involves using mathematical models and statistical methods to evaluate how potential risks might impact project outcomes, specifically focusing on metrics such as cost and schedule. In this process, project managers often make use of tools like Monte Carlo simulations, sensitivity analysis, or decision trees. These methods help quantify the likelihood of various risks and their potential impacts, enabling a more informed decision-making process regarding risk mitigation strategies. By providing a clearer picture of risks in numerical terms, project teams can prioritize risks and determine how much contingency might be needed, directly linking risk management to the achievement of project goals. The other options, while related to risk management, do not focus specifically on this numerical analysis aspect. Perform Qualitative Risk Analysis, for example, assesses the significance of risks in a more subjective manner without assigning numerical values, while Risk Management Planning and Risk Response Planning involve broader strategic approaches to managing risks rather than quantifying their potential effects on project objectives.