You are the project manager of a project in Bluewell Inc.
You and your project team have identified several project risks, completed risk analysis, and are planning to apply most appropriate risk responses.
Which of the following tools would you use to choose the appropriate risk response?
Click on the arrows to vote for the correct answer
A. B. C. D.C.
Decision tree analysis is a risk analysis tool that can help the project manager in determining the best risk response.
The tool can be used to measure probability, impact, and risk exposure and how the selected risk response can affect the probability and/or impact of the selected risk event.
It helps to form a balanced image of the risks and opportunities connected with each possible course of action.
This makes them mostly useful for choosing between different strategies, projects, or investment opportunities particularly when the resources are limited.
A decision tree is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.
Incorrect Answers: A: Project network diagrams help the project manager and stakeholders visualize the flow of the project work, but they are not used as a part of risk response planning.
B: Cause-and-effect analysis is used for exposing risk factors and not an effective one in risk response planning.
This analysis involves the use of predictive or diagnostic analytical tool for exploring the root causes or factors that contribute to positive or negative effects or outcomes.
D: Delphi technique is used for risk analysis, i.e., for identifying the most probable risks.
Delphi is a group of experts who used to rate independently the business risk of an organization.
Each expert analyzes the risk independently and then prioritizes the risk, and the result is combined into a consensus.
The tool that is typically used to choose the appropriate risk response is decision tree analysis (option C).
Decision tree analysis is a technique used to evaluate multiple alternatives and their potential outcomes. It involves creating a diagram that displays all possible courses of action and their potential consequences. The decision tree helps project managers evaluate the potential risks, benefits, and costs associated with each option, and choose the one that will result in the most desirable outcome.
In the context of project risk management, decision tree analysis can be used to identify the various risk responses that are available for each risk. For example, if the risk is related to project delays, the risk responses could include: adding more resources to the project, changing the project schedule, or reducing the scope of the project.
The decision tree analysis would help the project manager evaluate the potential benefits, risks, and costs associated with each response, and choose the one that is most appropriate for the project. This would help ensure that the project team is taking a structured and well-informed approach to managing project risks.
In contrast, project network diagrams (option A) are used to depict project activities, their dependencies, and critical path to analyze the project schedule. Cause-and-effect analysis (option B) is a technique used to identify the root causes of a problem. The Delphi Technique (option D) is a group decision-making technique that involves gathering input from experts to make decisions. While these techniques can be useful in project management, they are not typically used to choose risk responses.