A business analyst (BA) working with a large insurance corporation interviewed an industry thought leader who predicted that many of the regulations currently imposed by the government will change ver

Question

Options

• ARisk Neutral
• BRisk Averse
• CRisk Tolerant
• DRisk Seeking

• A
  2% (1)
• B
  94% (45)
• D
  4% (2)

Explanation

According to the BABOK® Guide, risk attitude is the degree to which an organization or stakeholder is willing to accept or avoid risk. There are four types of risk attitudes: risk neutral, risk averse, risk tolerant, and risk seeking. A risk neutral attitude means that the organization or stakeholder is indifferent to risk and makes decisions based on the expected value of the outcomes. A risk averse attitude means that the organization or stakeholder prefers to avoid risk and is willing to accept a lower return or pay a premium to reduce the uncertainty. A risk tolerant attitude means that the organization or stakeholder is willing to accept risk and is not concerned about the variability of the outcomes. A risk seeking attitude means that the organization or stakeholder prefers to take risk and is attracted by the possibility of higher returns or rewards. In this scenario, the corporation's attitude towards risk is risk averse, as it decided to cancel the initiatives that were driven by the government regulations based on the prediction of an industry thought leader. This shows that the corporation prefers to avoid the risk of investing in projects that may become obsolete or non-compliant due to the regulatory changes, and is willing to forego the potential benefits of those projects.

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