PMP · Question #1078
A project team has identified a risk and wants to accept it as an opportunity to finish a project earlier than planned. The project manager realizes that the sponsor may not accept the risk since…
The correct answer is D. Convince the sponsor that this will cost less, ultimately resulting in more profit for the sponsor. The project team identifies a risk as an opportunity for early completion, but the sponsor is risk-averse and needs convincing.
Question
A project team has identified a risk and wants to accept it as an opportunity to finish a project earlier than planned. The project manager realizes that the sponsor may not accept the risk since the sponsor is risk averse. What should the project manager do?
Options
- ACreate a contingency reserve to cover the risk in order to ensure that the risk will be accepted.
- BConduct a Monte Carlo analysis to determine if the team will complete the project early.
- CExplain to the sponsor that this is a nonevent type of risk and it will be fine to accept it.
- DConvince the sponsor that this will cost less, ultimately resulting in more profit for the sponsor.
How the community answered
(60 responses)- A3% (2)
- B5% (3)
- C8% (5)
- D83% (50)
Why each option
The project team identifies a risk as an opportunity for early completion, but the sponsor is risk-averse and needs convincing.
Creating a contingency reserve is a response to negative risks (threats), not an argument to convince a risk-averse sponsor to accept a positive risk (opportunity).
While Monte Carlo analysis can quantify the probability of early completion, it's a tool for analysis, not the direct method of *convincing* a risk-averse sponsor; the sponsor needs to understand the *value* proposition.
Calling an opportunity a 'non-event type of risk' is misleading and dismissive of the sponsor's valid concerns about risk; opportunities still carry uncertainty and potential negative consequences if not managed properly.
To gain approval from a risk-averse sponsor for an opportunity that involves risk, the project manager should clearly articulate the potential financial benefits, such as reduced costs and increased profits, as these are compelling motivators for stakeholders focused on the bottom line. Presenting a clear business case addressing the sponsor's primary concern (risk aversion) is key.
Concept tested: Risk management, stakeholder management, opportunity exploitation
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