International Project Management Association (IPMA) Practice Exam

Using reserves is an effective approach to directly mitigate cost and schedule risk. Reserves are funds or time allocated within a project to accommodate unexpected costs or delays that may arise during the project's lifecycle. By incorporating contingency reserves or management reserves, project managers can ensure that they have the necessary resources available to address potential risks without jeopardizing the overall project budget or timeline.

Reserves provide a safety net that helps to absorb the shock of unforeseen circumstances, such as changes in project scope, resource availability issues, or market fluctuations. This proactive strategy allows teams to respond effectively while maintaining control over project objectives and outcomes.

In contrast, while simulations, decision trees, and status reports are useful tools and techniques within project management, they do not directly alleviate the financial impact or timeline delays caused by risks. Simulations and decision trees are more focused on analyzing potential scenarios and decision-making processes, while status reports primarily serve as a means of communication and monitoring project progress rather than providing a financial buffer. Thus, using reserves is the most direct method for mitigating the specific risks associated with costs and schedules.