A risk is identified and documented by the risk manager, but it is unclear how this risk can be proactively managed. In this situation, what type of reserve should be allocated for the risk?

The correct answer is A. Contingency. Contingency reserve is allocated for identified, known risks (known unknowns)-risks that have been recognized and documented even if a specific proactive response strategy cannot be defined. Because the risk is identified and on the risk register, it qualifies for contingency res

Risk Strategy and Planning

Question

Options

AContingency
BManagement
CBudget
DResidual

How the community answered

(51 responses)

A
82% (42)
B
2% (1)
C
10% (5)
D
6% (3)

Explanation

Contingency reserve is allocated for identified, known risks (known unknowns)-risks that have been recognized and documented even if a specific proactive response strategy cannot be defined. Because the risk is identified and on the risk register, it qualifies for contingency reserve. Management reserve (B) is reserved for unknown unknowns-risks that have not been identified at all. Budget reserve (C) is not a standard PMI risk reserve category. Residual reserve (D) covers leftover risk exposure after a response has been applied, which is not the case here since no strategy has been implemented yet.

Topics

#Risk reserves#Contingency reserve#Known-unknowns#Risk response planning

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