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PFMP · Question #545

Risks are very important to manage in portfolio management and organizations can choose to embrace risks with the potential of high rewards. As a portfolio manager, planning and managing risks is…

The correct answer is B. Performance Risk, Regulatory Risk. Performance Risk and Regulatory Risk are recognized portfolio-level risk categories per the PMI Standard for Portfolio Management, making option B the correct pairing.

Risk Management

Question

Risks are very important to manage in portfolio management and organizations can choose to embrace risks with the potential of high rewards. As a portfolio manager, planning and managing risks is important. Risks are categorized in order to ease the process. Which of the following are considered as risk categories that a portfolio manager can use?

Options

  • AAll of the options
  • BPerformance Risk, Regulatory Risk
  • CPortfolio Component Risk, Market Risk
  • DOrganizational Risk, Image and Public Relation Risk

How the community answered

(49 responses)
  • A
    2% (1)
  • B
    90% (44)
  • C
    6% (3)
  • D
    2% (1)

Why each option

Performance Risk and Regulatory Risk are recognized portfolio-level risk categories per the PMI Standard for Portfolio Management, making option B the correct pairing.

AAll of the options

Not all options represent valid PMI-recognized portfolio risk categories; options C and D contain pairings that do not match the standard risk category taxonomy defined for portfolio management.

BPerformance Risk, Regulatory RiskCorrect

The PMI Standard for Portfolio Management identifies specific risk categories applicable at the portfolio level. Performance Risk relates to the portfolio's ability to achieve intended outcomes, while Regulatory Risk relates to compliance and legal obligations - both are explicitly recognized portfolio-level risk categories used to structure the risk management approach.

CPortfolio Component Risk, Market Risk

Portfolio Component Risk conflates the level of analysis (component vs. portfolio), and Market Risk, while relevant in context, is not listed as a primary portfolio risk category in PMI standards.

DOrganizational Risk, Image and Public Relation Risk

Organizational Risk and Image/Public Relation Risk are not primary PMI-defined portfolio risk categories and do not appear in the standard risk category taxonomy for portfolio management.

Concept tested: PMI portfolio management risk categories

Source: https://www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management

Topics

#Portfolio Risk Management#Risk Categories#Performance Risk#Regulatory Risk

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