What is Contingency Reserve?
Contingency reserve is time or money set aside for identified risks — the "known unknowns" already sitting in the risk register. It's part of the cost baseline and typically within the project manager's authority to use when a planned-for risk fires.
Keep the exam pair straight: contingency covers known unknowns and belongs to the PM; management reserve covers unknown unknowns and belongs to management.
Worked example
Monte Carlo analysis suggests identified risks could add $40,000. That $40,000 becomes contingency reserve inside the cost baseline, spendable by the PM when those identified risks occur. An unforeseen regulation change, though, taps management reserve — sponsor approval required.