PFMP · Question #147
Which type of analysis is most suitable for identifying the highest-impact risks?
The correct answer is B. Sensitivity. Sensitivity analysis is the most appropriate technique for identifying the highest-impact risks because it isolates how changes in individual risk variables affect overall portfolio outcomes.
Question
Which type of analysis is most suitable for identifying the highest-impact risks?
Options
- AAlignment
- BSensitivity
- CPrioritization
- DCost-benefit
How the community answered
(27 responses)- A4% (1)
- B93% (25)
- C4% (1)
Why each option
Sensitivity analysis is the most appropriate technique for identifying the highest-impact risks because it isolates how changes in individual risk variables affect overall portfolio outcomes.
Alignment analysis assesses how well portfolio components support strategic objectives and does not measure the relative impact of individual risks.
Sensitivity analysis varies one risk factor at a time while holding others constant, revealing which uncertainties have the greatest influence on portfolio performance. This allows the portfolio manager to rank risks by their potential impact magnitude and focus risk response efforts on the most consequential factors.
Prioritization analysis ranks components or work packages but is not designed to measure the impact magnitude of specific risk variables.
Cost-benefit analysis evaluates the financial return on decisions and investments, not the relative severity or impact of portfolio risks.
Concept tested: Sensitivity analysis for identifying highest-impact portfolio risks
Source: https://www.pmi.org/pmbok-guide-standards/foundational/portfolio-management
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