Risk Analysis & Management Flashcards
6 cards from real CCC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Risk Analysis & Management flashcards as text
What is the primary purpose of risk analysis in cost consulting?
Answer: To identify, assess, and mitigate financial risks
Risk analysis helps identify, assess, and mitigate financial risks that could impact a project's cost and schedule, ensuring better decision-making.
Which risk management strategy focuses on reducing the likelihood of a risk occurring?
Answer: Risk mitigation
Risk mitigation involves taking proactive measures to reduce the probability or impact of a risk on a project’s cost and schedule.
What does a Monte Carlo simulation help with in cost risk analysis?
Answer: It models cost outcomes using probability distributions
Monte Carlo simulation models various cost scenarios using probability distributions to predict potential project cost outcomes.
Which of the following is an example of risk transfer in cost consulting?
Answer: A company purchasing insurance for potential financial losses
Risk transfer involves shifting risk responsibility to another party, such as through insurance or contractual agreements with vendors.
What is the benefit of conducting a sensitivity analysis in project cost risk assessment?
Answer: It identifies the impact of variable changes on project costs
Sensitivity analysis helps determine how changes in key variables affect project costs, allowing for better risk management.
Why is contingency planning important in cost consulting?
Answer: It ensures preparedness for unexpected costs and delays
Contingency planning ensures that funds and strategies are in place to handle unexpected costs or delays, reducing financial risk exposure.