You are the project manager of the NKJ Project for your company. The project’s success or failure will have a significant impact on your organization’s profitability for the coming year. Management has asked you to identify the risk events and communicate the event’s probability and impact as early as possible in the project. Management wants to avoid risk events and needs to analyze the cost-benefits of each risk event in this project. What term is assigned to the low-level of stakeholder tolerance in this project?
A.
Risk utility function
B.
Mitigation-ready project management
C.
Risk-reward mentality
D.
Risk avoidance
Explanation:
Risk utility function is assigned to the low-level of stakeholder tolerance in this project.
The risk utility function describes a person’s or organization’s willingness to accept risk. It is synonymous with stakeholder tolerance to risk. Risk utility function facilitates the selection and acceptance of risk and provides opportunity to merge the approach with setting thresholds of risk acceptability and using utility-risk ratios if necessary.
Answer option D is incorrect. Risk avoidance is a risk response to avoid negative risk events.
Answer option B is incorrect. This is not a valid project management and risk management term.
Answer option C is incorrect. Risk-reward describes the balance between accepting risks and the expected reward for the risk event. Risk-reward mentality is not a valid project management term.
Reference: "Project Management Body of Knowledge (PMBOK Guide), Fourth Edition"