PFMP · Question #662
You are the portfolio manager for your military-vehicle service firm, which has been in existence for 20 years. You have a number of components under way, and others in the pipeline. One component…
The correct answer is A. Execution risk. A simulator shutdown due to a nitrogen leak that disrupts multiple active components is classified as an execution risk because it is an operational event that impairs ongoing portfolio component activities.
Question
You are the portfolio manager for your military-vehicle service firm, which has been in existence for 20 years. You have a number of components under way, and others in the pipeline. One component involves a new gas detection system, which uses new technology. It has interfaces with two other existing components plus one in development. Recently, a simulator, used by three components, had to be shut down completely as it was leaking nitrogen and could lead to asphyxiation. You reported it immediately to the Hazardous Materials and Pipeline Safety Administration. This is an example of a:
Options
- AExecution risk
- BStructural risk
- CCritical incident
- DKnown unknown
How the community answered
(23 responses)- A83% (19)
- B4% (1)
- C9% (2)
- D4% (1)
Why each option
A simulator shutdown due to a nitrogen leak that disrupts multiple active components is classified as an execution risk because it is an operational event that impairs ongoing portfolio component activities.
An execution risk is a risk that materializes during the active execution phase of portfolio components; the simulator failure directly halted work on three components in progress, which is a textbook operational disruption - an execution-level risk event that has already occurred within the portfolio's ongoing work.
Structural risk refers to how the portfolio is organized and how its components interrelate, not to a physical operational failure occurring during component execution.
A critical incident is a regulatory or safety classification tied to reporting obligations, but in portfolio management taxonomy, the impact of this event on active work is categorized under execution risk.
A known unknown is a potential risk that has been identified but whose outcome is uncertain; the nitrogen leak has already occurred and caused damage, making it an actual risk event rather than an anticipated one.
Concept tested: Portfolio execution risk identification and classification
Source: https://www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management
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