Examine the figure given below.
What will be the expected monetary value of Risk C?
A.
-$113,750
B.
-$27,000
C.
-$175,000
D.
$175,000 if the risk event actually happens
Explanation:
The expected monetary value is found by multiplying the probability times the impact. In this example it would be 0.30 times -$90,000 for -$27,000.
Answer option C is incorrect. This is not a valid calculation for the expected monetary value. Answer option A is incorrect. This is not a valid calculation for the expected monetary value. Answer option D is incorrect. The expected monetary value is based on the current probability and impact. Reference: “Project Management Body of Knowledge (PMBOK Guide), Fourth Edition”
