Which of the following statements regarding project risk management is TRUE?

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BlackTom AI · Accepted Answer

Question restatement: The prompt asks which statement about project risk management is TRUE among the four options.
Option 1: 'Simply accepting a risk is not a valid risk treatment strategy.' This is misleading. In risk management, acceptance can be a valid strategy when the cost of other treatments outweighs the risk or when the risk is deemed acceptable. So saying it is not a valid strategy is incorrect, as acceptance is indeed a recognized risk response in many frameworks.
Option 2: 'Typically a risk color coded green in a risk analysis matrix is of high probability and high impact.' In a risk matrix, green usually represents low risk (low probability and/or low impact), not high risk. High risk is typically indicated by yellow, orange, or red categories depending on the scheme. Thus this statement misinterprets risk color coding and is incorrect.
Option 3: 'Risks cannot be transferred because ultimately your own project will suffer the consequences if the event occurs.' Risk transfer is a common and valid risk response (e.g., insurance, contracts, outsourcing). This statement incorrectly asserts that transfer is impossible, which is false. Therefore this option is incorrect.
Option 4: 'Risks can be quantified by multiplying the probability that the risk will occur by the impact of the failure measured in dollars.' This reflects a standard quantitative risk analysis approach where risk exposure or expected monetary value is calculated as Risk = Probability × Impact (often expressed in monetary terms). This aligns with established risk management practices, making the statement true.
Summary of reasoning: Option 1 incorrectly dismisses acceptance as never valid, option 2 misinterprets risk matrix color codes, option 3 wrongly claims transfer is impossible, and option 4 correctly captures the quantitative method used to assess risk magnitude in financial terms. The analysis above explains why each incorrect option fails to align with standard risk management concepts, and why the quantitative formulation in option 4 appropriately describes risk quantification.

22787 Business Project Management - Spring 2025 Practice Quiz - Week 5

Which of the following statements regarding project risk management is TRUE?

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