What action should the risk manager propose?

The project manager wants to use an objective method to evaluate the key project risks and develop response plans.

What action should the risk manager propose?
A . Ask the team to perform an earned value analysis.
B . Review the lessons learned from other projects.
C . Ask the team to prepare a Monte Carlo analysis.
D . Ask the risk expert to perform a PESTLE evaluation.

View Answer

Answer: C

Explanation:

The action that the risk manager should propose is to ask the team to prepare a Monte Carlo analysis. This is a statistical technique that can be used to model the probability of different outcomes in a project. By performing a Monte Carlo analysis, the project manager can objectively evaluate key project risks and develop response plans based on this analysis.

A Monte Carlo analysis is a simulation technique that uses probability distributions and random

sampling to model the possible outcomes of a project risk event. It can help the project manager to evaluate the key project risks and develop response plans based on the expected value, standard deviation, and confidence intervals of the results. A Monte Carlo analysis can also provide information on the probability of achieving the project objectives, such as cost, schedule, and quality. A Monte Carlo analysis is an objective method because it does not rely on subjective judgments or opinions, but on mathematical calculations and statistical data.

Reference: PMBOK Guide, 6th edition, Section 1 1. 5.2.3, Monte Carlo Analysis1