Jeff, a key stakeholder in your project, wants to know how the risk exposure for the risk events is calculated during quantitative risk analysis. He is worried about the risk exposure which is too…

Question

Options

• AThe risk exposure of a risk event is determined by historical information.
• BThe probability of a risk event times the impact of a risk event determines the true risk exposure.
• CThe probability of a risk event plus the impact of a risk event determines the true risk exposure.
• DThe probability and impact of a risk event are gauged based on research and in-depth analysis.

• A
  3% (1)
• B
  92% (36)
• C
  5% (2)

Explanation

Risk exposure is calculated using the formula: Risk Exposure = Probability × Impact. This is the Expected Monetary Value (EMV) formula used in quantitative risk analysis. Choice A (historical information) describes a data source, not a calculation method. Choice C (probability plus impact) is mathematically incorrect - adding rather than multiplying these values does not produce a meaningful risk metric. Choice D describes a qualitative judgment approach, not the quantitative formula. The multiplication formula properly weights the financial impact by the likelihood of the event occurring.

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