True or False: Budget reserves are intended to cover identified risks, while management reserves cover unidentified risks.

Budget reserves are indeed designed to address identified risks that have been recognized during the risk management process. These reserves are set aside as a contingency to cover potential costs that may arise from risks that have been assessed and understood. On the other hand, management reserves are used to address unidentified risks that have not been specifically planned for or foreseen. Management reserves provide a buffer for uncertainties that may emerge during the project lifecycle, enabling project managers to have some flexibility in handling unforeseen challenges without derailing the overall budget.

This distinction is crucial in project management, as it highlights the need for both types of reserves in comprehensive project planning. Identified risks require specific preparations through budget reserves, while the unpredictable nature of unidentified risks necessitates the safety net offered by management reserves.