Question 449 of 487
CAPM Predictive Plan-Based Methodologies Practice Question
A manufacturing project using predictive plan-based methodology is underway. The project manager identifies a risk that a key raw material supplier may go bankrupt, which would halt production for at least two weeks. The probability is assessed as 30% with a high impact. The project manager plans to hold a risk response planning meeting with the team. One team member suggests identifying an alternative supplier and signing a contingency contract. Another recommends self-insuring by setting aside budget reserves. The project sponsor wants to reduce the probability by investing in supplier financial health monitoring. Which combination of risk responses is MOST appropriate for this risk?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Transfer the risk by signing a contingency contract with an alternative supplier, and mitigate the risk by monitoring the supplier's financial health.
The correct combination is transferring the risk via a contingency contract with an alternative supplier and mitigating the risk by monitoring the supplier's financial health. Transfer involves shifting the financial impact to another party (the alternative supplier through a contingency contract), while mitigation reduces the probability or impact (monitoring financial health). Option B (stockpiling) is a form of mitigation but not mentioned in the stem, and cancelling the project (avoid) is too extreme. Option A suggests avoid by changing material (not feasible) and accept. Option D suggests accept and ignore, which is not appropriate for a high-impact risk.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Avoid the risk by choosing a different raw material, and accept the risk by setting aside contingency reserves.
Why it's wrong here
Avoiding may not be feasible without significant scope change.
- ✗
Mitigate the risk by stockpiling raw materials, and avoid the risk by cancelling the project.
Why it's wrong here
Cancelling is extreme and not necessary.
- ✓
Transfer the risk by signing a contingency contract with an alternative supplier, and mitigate the risk by monitoring the supplier's financial health.
Why this is correct
Contingency contract transfers the impact, monitoring reduces probability.
- ✗
Accept the risk by using management reserves, and ignore mitigation efforts.
Why it's wrong here
Proactive responses are expected for high-impact risks.
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Last reviewed: Jun 24, 2026
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