PfMP Portfolio Risk Management Practice Test 2 — 15 Questions

Question 1

What is the primary purpose of a Portfolio Risk Management Plan?

Accepted Answer

To define the processes for managing portfolio risks.. The Portfolio Risk Management Plan defines the processes, roles, responsibilities, and methodologies for identifying, assessing, responding to, and monitoring portfolio risks. It is a governance artifact that establishes how risk management will be conducted across the portfolio, not a repository of current risks or a reserve authorization document. Its primary purpose is to provide a consistent, repeatable framework for managing risk at the portfolio level.

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To assign blame for failed projects.

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To list all current portfolio risks.

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To authorize the use of contingency reserves.

Question 2

Which document is used to track the status of approved risk responses?

Accepted Answer

Portfolio Risk Register.. The Portfolio Risk Register is the document that records identified portfolio risks, their analysis (probability, impact, exposure), assigned risk owners, planned responses, and—critically—the status of those responses. It is the living artifact used to track whether mitigation actions are on schedule and effective. The other documents listed serve different governance or planning purposes and do not track risk response status.

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Portfolio Charter.

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Portfolio Roadmap.

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Resource Management Plan.

Question 3

During a portfolio review, you observe that the actual ROI is consistently lower than predicted due to cumulative risk impacts. What is the most logical next step?

Accepted Answer

Re-balance the portfolio by prioritizing projects with higher ROI and lower risk.. When actual ROI consistently falls below predictions due to cumulative risk impacts, the portfolio manager's core responsibility is to rebalance the portfolio — shifting investment toward components with stronger risk-adjusted returns and away from underperformers. This is the portfolio balancing and optimization response, not a budget, target, or restart decision.

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Increase the budget for all projects to improve their output.

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Ask the board to lower the ROI targets for the year.

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Stop all active projects and restart the portfolio planning cycle.

Question 4

You are performing a portfolio-level qualitative risk analysis. Which method is best for ranking risks?

Accepted Answer

Probability and Impact Matrix.. The Probability and Impact Matrix is the standard qualitative risk analysis tool for ranking risks by combining their likelihood of occurrence with their potential impact. It produces a relative priority ranking that helps portfolio managers focus attention and resources on the most significant risks. Monte Carlo and sensitivity analysis are quantitative techniques, and ROI is a financial metric, not a risk ranking method.

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Return on Investment (ROI) calculation.

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Monte Carlo analysis.

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Sensitivity Analysis.

Question 5

A major vendor supporting your portfolio has filed for bankruptcy. This is an example of:

Accepted Answer

A portfolio-level risk.. A vendor bankruptcy is a portfolio-level risk because it can affect multiple projects, programs, and business operations simultaneously, threatening benefits realization across the portfolio. Portfolio risks are uncertainties that impact the portfolio's strategic objectives, and a major vendor failure is exactly that type of cross-cutting threat. It requires portfolio-level response planning, such as diversifying suppliers or invoking contingency contracts, rather than being handled solely at the project level.

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An internal operational bottleneck.

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A simple issue to be fixed by procurement.

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A project-level constraint.

Question 6

You are assessing the 'aggregate risk exposure' of a portfolio. What is the most critical factor to consider?

Accepted Answer

The dependencies and correlations between portfolio risks.. Interdependencies and correlations are the key factors that differentiate aggregate risk from the sum of parts.

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The total budget allocated to the project office.

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The average experience level of the project managers.

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The number of projects currently active.

Question 7

Which of the following is an input to Portfolio Risk Identification?

Accepted Answer

Portfolio Strategic Plan.. The Portfolio Strategic Plan is a formal input to the Portfolio Risk Identification process because it defines the portfolio's strategic objectives, investment mix, and prioritization criteria — all of which frame which risks are relevant to the portfolio. Risk identification must be anchored to strategic intent, so the strategic plan is the authoritative source. The other options are operational or personal artifacts with no bearing on portfolio-level risk identification.

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Daily task lists of project staff.

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Personal resumes of the board members.

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Project team performance reviews.

Question 8

A risk is identified that could positively impact the portfolio's strategic goals. How should this be handled?

Accepted Answer

Analyze the opportunity and plan to enhance its realization.. A risk with a positive impact is an opportunity, and portfolio management requires that opportunities be analyzed and planned for so their realization can be enhanced or exploited. This means assessing the probability and impact, determining a response strategy (exploit, enhance, share, or accept), and integrating it into portfolio planning.

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Transfer the opportunity to an external contractor.

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Ignore it, as risks are only for negative impacts.

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Add it to the issues log immediately.

Question 9

When a portfolio risk occurs and impacts the strategic goals, this event is now classified as:

Accepted Answer

A portfolio issue.. Once a risk occurs, it is officially recorded as an issue.

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An external audit finding.

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A project failure.

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A new risk.

Question 10

What is the primary role of the Portfolio Manager regarding risk?

Accepted Answer

To establish and oversee the portfolio risk management process.. The portfolio manager's primary risk role is to establish and oversee the portfolio risk management process, ensuring that risk is identified, assessed, prioritized, and managed consistently across all components. This includes defining risk appetite, aggregating component risks into portfolio-level exposure, and reporting to governance bodies. The portfolio manager does not personally manage every project risk but provides the framework and oversight that enables consistent risk management.

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To hide risks from the board until they are solved.

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To write the detailed task plan for every project.

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To fix every issue on every project personally.

Question 11

You are reporting portfolio risk status to the governance board. What is the most effective way to communicate this?

Accepted Answer

Present a high-level dashboard summarizing the portfolio's aggregate risk exposure.. Governance boards need aggregated, decision-ready information, and a high-level dashboard summarizing the portfolio's aggregate risk exposure provides exactly that — it condenses many project-level risks into portfolio-level themes, heat maps, and trend indicators. This aligns with PfMP's emphasis on portfolio-level reporting that supports strategic decision-making rather than operational detail. It also respects the board's time and lets them focus on the risks that threaten strategic objectives.

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Read the entire risk register line by line.

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Email a spreadsheet with all raw data points.

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Tell them only about the smallest risks so as not to worry them.

Question 12

A risk response is proving ineffective. What should you do?

Accepted Answer

Re-assess the risk and develop a revised response strategy.. When a risk response is ineffective, the risk management process requires re-evaluating the risk and developing a revised response strategy. This aligns with the PMBOK principle of continuous risk monitoring and adaptive response planning. Simply continuing or closing the risk without addressing it would leave the project exposed.

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Continue with the plan, hoping it works eventually.

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Close the risk to remove it from the register.

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Fire the project team responsible for the risk.

Question 13

Which THREE of the following are considered when assessing portfolio risk?

Accepted Answer

Strategic alignment of projects.. Portfolio risk assessment evaluates how the collection of projects collectively affects organizational objectives, so option C (Strategic alignment of projects) is correct because misalignment across the portfolio can undermine expected benefits and increase strategic risk. Option D (Resource availability constraints) is correct because shared or scarce resources across projects create scheduling conflicts, bottlenecks, and delivery risk at the portfolio level. Option E (Aggregate financial impact) is correct because portfolio risk considers the combined financial exposure and potential losses across all projects, not just individual project budgets. Options A and B are incorrect because office social events and wallpaper color are irrelevant environmental or aesthetic factors with no bearing on portfolio risk analysis.

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The frequency of office social events.

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The color of the project office wallpaper.

Question 14

Which TWO of the following are primary objectives of portfolio risk management?

Accepted Answer

To align risk responses with the portfolio's strategic goals.. Option C is correct because portfolio risk management exists to ensure that risk responses are prioritized and executed in line with the organization's strategic objectives, rather than being managed in isolation at the individual project level. Option D is correct because a central purpose of portfolio risk management is to protect and preserve the aggregate value of the portfolio by identifying, assessing, and mitigating risks that could erode returns across multiple projects or programs. Options A, B, and E are not primary objectives: reducing project managers' workload is an operational side effect at best, increasing the number of projects is unrelated to risk management (and could actually increase risk exposure), and guaranteeing every project stays under budget is an unrealistic project-level cost goal rather than a portfolio risk management objective.

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To reduce the workload of the project managers.

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To increase the total number of projects in the portfolio.

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To ensure every project is completed under budget.

Question 15

Which TWO of the following are appropriate portfolio risk response strategies for threats?

Accepted Answer

Mitigation.. Mitigation (C) is a correct threat response strategy because it reduces the probability and/or impact of a threat through proactive actions, such as implementing controls or contingency plans. Avoidance (D) is also correct because it eliminates the threat entirely by changing the portfolio scope, approach, or requirements so the risk no longer applies. Enhancement (A) is not a threat response; it is an opportunity response that aims to increase the probability or impact of a positive risk. Sharing (B) is an opportunity response (e.g., partnering to capture upside), not a standard threat strategy, though threat transference is sometimes confused with sharing. Ignoring (E) is not a recognized risk response strategy; threats must be actively addressed or accepted, not simply ignored.

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Enhancement.

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Sharing.

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Ignoring.