Contingency Reserve Total: US$213,000 Due to a mitigation strategy, Risk 4's probability has been reduced to 40%. What would be the new contingency reserve total?

The correct answer is C. US$157,000. The new contingency reserve total is US$157,000. The difference between the original total (US$213,000) and the new total (US$157,000) is US$56,000, which represents the reduction in Risk 4's expected monetary value (EMV) due to the successful mitigation. EMV = Probability ×…

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Question

Exhibit

Options

AUS$92,400
BUS$145,800
CUS$157,000
DUnable to calculate a total due to lack of pertinent information.

How the community answered

(35 responses)

A
3% (1)
B
6% (2)
C
83% (29)
D
9% (3)

Explanation

The new contingency reserve total is US$157,000. The difference between the original total (US$213,000) and the new total (US$157,000) is US$56,000, which represents the reduction in Risk 4's expected monetary value (EMV) due to the successful mitigation. EMV = Probability × Impact. Because Risk 4's probability was reduced to 40%, its EMV decreased, and that reduction flows directly into a lower contingency reserve. The specific impact value for Risk 4 (US$140,000) can be back-calculated: original EMV contribution minus new EMV contribution equals US$56,000, consistent with a probability reduction applied to a known impact value. Option D is incorrect because sufficient information is available to perform this calculation.

Topics

#Contingency Reserve#Expected Monetary Value (EMV)#Risk Mitigation#Quantitative Risk Analysis

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