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.
Mitigation-ready project management

B.
Risk avoidance

C.
Risk utility function

D.
Risk-reward mentality

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 B is incorrect. Risk avoidance is a risk response to avoid negative risk events.
Answer A is incorrect. This is not a valid project management and risk management term.
Answer D 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.