CAP · Question #344
A high-profile, high-priority project within your organization is being created. Management wants you to pay special attention to the project risks and do all that you can to ensure that all of the…
The correct answer is A. Utility function. A utility function (also called a risk utility function or risk tolerance curve) mathematically expresses a stakeholder's attitude toward risk-whether they are risk-averse, risk-neutral, or risk-seeking. A risk-averse organization has a utility function that reflects their…
Question
A high-profile, high-priority project within your organization is being created. Management wants you to pay special attention to the project risks and do all that you can to ensure that all of the risks are identified early in the project. Management has to ensure that this project succeeds. Management's risk aversion in this project is associated with what term?
Options
- AUtility function
- BRisk conscience
- CQuantitativerisk analysis
- DRisk mitigation
How the community answered
(33 responses)- A91% (30)
- B6% (2)
- C3% (1)
Explanation
A utility function (also called a risk utility function or risk tolerance curve) mathematically expresses a stakeholder's attitude toward risk-whether they are risk-averse, risk-neutral, or risk-seeking. A risk-averse organization has a utility function that reflects their preference to avoid uncertainty even at the cost of potential gains. In project management (e.g., PMBOK), risk aversion is directly tied to the concept of utility function. Risk conscience is not a standard PMI term; quantitative risk analysis is a process, not an attitude descriptor; and risk mitigation is a response strategy rather than a characterization of management's disposition toward risk.
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