CAP · Question #4
You are the project manager of the NKJ Project for your company. The project's success or failure will have a significant impact on your organization's profitability for the coming year. Management ha
The correct answer is C. Risk utility function. The Risk Utility Function (also called the risk utility or risk tolerance curve) describes how a stakeholder values or tolerates risk relative to potential gain or loss. A low risk tolerance - such as management wanting to avoid risks and carefully analyze cost-benefits - is char
Question
You are the project manager of the NKJ Project for your company. The project's success or failure will have a significant impact on your organization's profitability for the coming year. Management has asked you to identify the risk events and communicate the event's probability and impact as early as possible in the project. Management wants to avoid risk events and needs to analyze the cost-benefits of each risk event in this project. What term is assigned to the low- level of stakeholder tolerance in this project?
Options
- ARisk avoidance
- BMitigation-ready project management
- CRisk utility function
- DRisk-reward mentality
How the community answered
(56 responses)- A2% (1)
- B7% (4)
- C86% (48)
- D5% (3)
Explanation
The Risk Utility Function (also called the risk utility or risk tolerance curve) describes how a stakeholder values or tolerates risk relative to potential gain or loss. A low risk tolerance - such as management wanting to avoid risks and carefully analyze cost-benefits - is characterized by a risk utility function that reflects risk aversion. Risk avoidance (A) is a response strategy, not a descriptor of tolerance. 'Mitigation-ready project management' (B) is not a recognized PMI term. 'Risk-reward mentality' (D) implies a willingness to accept risk for gain, the opposite of what is described.
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