Project Management Professional PMP · Free Practice Question Easy
Question 74
You are the project manager of a large project in your organization. Many of the stakeholders are concerned about the project's success, and they often ask you for updates and status on the project. You are responsible for prioritizing project risks. The risks should be prioritized to correspond to their expected monetary value, where the risk with the highest expected monetary value is the highest priority. Which risk is the lowest priority?
- A A risk with a 2 percent probability of costing the organization $3,000,000.00.
- B A risk with a 30 percent probability of costing the organization $109,000.00.
- C A risk with a 10 percent probability of costing the organization $700,000.00.
- D A risk with a 25 percent probability of costing the organization $100,000.00.
Reveal correct answer
Correct answer: D
Explanation
The expected monetary value is calculated by multiplying the probability by the impact. The option with a 25 percent probability has an expected monetary value of $25,000.00 making it the risk with the lowest priority. The option with a 30 percent chance of occurring has an expected monetary value of $32,700.00. The risk with 10 percent of happening has an expected monetary value of $70,000.00. Therefore, the risk with a 10 percent chance of occurrence should be the highest priority due to the highest expected monetary value. The risk with a 2 percent chance of occurrence has an expected monetary value of $60,000.00.Discussion
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