PMI-RMP · Question #6
You are the project manager of the YHG project for your company. Within the project, you and the project team have identified a risk event that could have a financial impact on the project of…
The correct answer is A. This is mitigation because the response reduces the probability. Risk mitigation is a strategy that seeks to reduce the probability and/or impact of a risk event to an acceptable threshold. In this scenario, the solution reduces the probability from 70% to 10% - a clear example of mitigation. Transference involves shifting the financial…
Question
You are the project manager of the YHG project for your company. Within the project, you and the project team have identified a risk event that could have a financial impact on the project of $450,000. This risk event has a 70 percent chance of occurring in the project. The project identifies a solution that will reduce the probability of the risk event to ten percent, but it will cost $260,000 to implement. Management agrees with the solution and asks that you include the risk response in the project plan. What risk response is this?
Options
- AThis is mitigation because the response reduces the probability.
- BThis is not a risk response, but a change request.
- CThis is transference because of the $260,000 cost of the solution.
- DThis is avoidance because the risk response caused the project plan to be changed.
How the community answered
(41 responses)- A76% (31)
- B5% (2)
- C15% (6)
- D5% (2)
Explanation
Risk mitigation is a strategy that seeks to reduce the probability and/or impact of a risk event to an acceptable threshold. In this scenario, the solution reduces the probability from 70% to 10% - a clear example of mitigation. Transference involves shifting the financial impact to a third party (e.g., insurance), which is not happening here. Avoidance eliminates the risk entirely, but a 10% residual probability still remains. A change request is a formal document, not a risk response strategy. The cost of implementation ($260,000) compared to the original EMV (0.70 × $450,000 = $315,000) makes this a financially reasonable mitigation action.
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