PMI Updated PMI-RMP Exam Questions and Answers by kasper

The expected monetary value (EMV) for this project can be calculated as follows: (0.6 x US$100,000) - (0.4 x US$100,000) = US$60,000 - US$40,000 = US$20,000 profit.

The EMV of a project is the weighted average of the possible outcomes, which are a US$100,000 profit or a US$100,000 loss in this case. To calculate the EMV, we multiply the probability of each outcome by its monetary value, and then add them together. The formula is:

EMV = (Probability of profit x Value of profit) + (Probability of loss x Value of loss)

In this case, the probability of profit is 60%, and the value of profit is US$100,000. The probability of loss is 40%, and the value of loss is -US$100,000 (negative because it is a loss). Therefore, the EMV is:

EMV = (0.6 x 100,000) + (0.4 x -100,000) EMV = 60,000 - 40,000 EMV = US$20,000

This means that the project has an expected monetary value of US$20,000 profit, which is the answer option B. The other options are incorrect because they do not match the EMV calculation.

The EMV is a useful tool for comparing different projects or alternatives based on their expected values. However, it does not account for the variability or uncertainty of the outcomes, which may also affect the project decision making. For example, a project with a higher EMV but a higher risk may not be preferable to a project with a lower EMV but a lower risk. Therefore, the EMV should be used with caution and in conjunction with other risk analysis techniques.

For more information on the EMV and other risk analysis methods, you can refer to the PMI Risk Management Professional (PMI-RMP) Examination Content Outline and Specifications, the A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, and the Expected Monetary Value (EMV): A Guide With Examples. I hope this helps you understand the concept of EMV and how to apply it to project risk management

The project manager should monitor and control secondary and residual risks in the risk register. This will ensure that any new risks identified during the implementation of the risk response plan are captured and managed effectively. Monitoring and controlling risks is a continuous process that helps in identifying, analyzing, and planning for new risks as well as updating the risk register as needed.

 According to the PMI Risk Management Professional (PMI-RMP)® Examination Content Outline, one of the tasks under the domain of Risk Response Planning is to “identify and assess the effectiveness of alternative strategies to reduce threats or enhance opportunities, such as mitigation, transference, avoidance, and acceptance” 1. This implies that the project manager should also consider the potential secondary or residual risks that may arise from implementing the chosen risk response strategy. Secondary risks are new risks that are created as a direct result of implementing a risk response, while residual risks are those that remain after the risk response has been executed 2. Both types of risks should be identified and assessed for their impact and probability, and added to the risk register for further monitoring and control. Therefore, the correct answer is A.

When a risk has materialized and become an issue despite preventive actions, the next logical step is to implement the pre-established risk response plan. This plan is designed specifically to address the risk if it occurs, ensuring that the project can quickly and effectively manage the issue. According to PMI's risk management guidelines, implementing the risk response plan is a critical step once a risk has been triggered, as it provides a structured approach to resolving the issue with minimal impact on the project​.

When a risk manager notices that the risk register is missing key data, the most critical information they will require first includes the risk description, risk probability, and risk impact. These elements are fundamental to understanding each risk and planning appropriate responses. The risk description provides a clear understanding of what the risk is, while the probability and impact help in assessing the severity and likelihood of the risk occurring, which are essential for prioritizing and managing risks effectively.

PMI’s risk management guidelines emphasize the importance of having these core data points to effectively manage risks throughout the project lifecycle​​.