A Key Distinction Between a Risk Response and a Contingency

question 47

Multiple Choice

A key distinction between a risk response and a contingency plan is

• A)A risk response is established only for moderate risks while contingency plans are established for major risks.
• B)A risk response is part of the actual implementation plan and action is taken before the risk can materialize, while a contingency plan goes into effect only after the risk has transpired.
• C)A risk response is only effective when you are able to assess the likelihood of the risk and its impact on the project; all other risks are covered by contingency planning.
• D)A risk response is created by the project team and the project manager while the project manager and the customer agree on the contingency plan.
• E)A risk response is action that is the response to a risk once it has happened and the contingency plan is created by the customer if the risk response fails.

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Definitions:

Accounts Receivable

Represents money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Depreciation Expense

The allocated portion of the cost of a tangible fixed asset written off each year, reflecting its usage and wear and tear.

Patent Amortization

The gradual expensing of the cost of a patent (an intangible asset) over its useful life.