Exam PMP topic 1 question 375 discussion

The risk tolerance of the company was 20%. PM was unaware of this information. Else, should have been prioritized the risk and developed mitigation plan for it. So I think, answer D looks closer than C. Any other thoughts?

PM was surprised to see a new risk tolerance level. If he engaged right stakeholders, he would have got the info before. After step b, it is step d, followed by step c.

The project manager was unaware of the CEO’s acceptable cost overrun limit (20%), which indicates a failure in stakeholder engagement and communication. The stakeholder engagement plan ensures that key stakeholders (such as the CEO) are actively consulted and informed throughout the project. If the project manager had effectively engaged stakeholders, they would have known about the organization’s risk tolerance in advance and taken proactive action.

this option is D

D is correct, PM needs to know the risk tolerance of company.

Ensured the risk tolerance of the company was properly updated and clearly understood before updating the risk register. This includes understanding the organization's risk appetite, thresholds, and tolerance levels, including the acceptable cost overrun percentage. In this case, the project manager was unaware of the 20% acceptable cost overrun limit, which is a critical piece of information that impacts project decision-making.

Address issue directly, this one is for proper risk management.

The project manager should have chosen option **D. Ensured the risk tolerance of the company was properly updated**. This would have allowed the project manager to be aware of the acceptable cost overrun limit set by the company. Being aware of this limit, the project manager could have planned and managed the project accordingly to ensure that the cost overrun does not exceed the acceptable limit. Remember, understanding and managing risks within the organization's risk tolerance is a key aspect of effective project management.

Answer is D

D should be correct

In my opinion, if you chose (D) what is the benefit from ensuring the tolerance level!! the CEO wants to terminate the project. However, it's a correct procedure but not with this situation. Other choices did not make sense to me. I think the best answer is (C) because you need to do a real action or response to the coming risk. My analyzing could be wrong but this is what I imagined

D. Ensured the risk tolerance of the company was properly updated. In this scenario, the project manager identified a significant risk related to new tax policies, which could lead to a cost overrun. However, the project manager did not consider the organization's risk tolerance or the acceptable level of risk for the project. It's crucial to align the project's risk management activities with the organization's risk tolerance and risk management policies.

Effective risk responses are vital if the risk management process is to meet its objectives of “… identifying, analyzing, and responding to project risk … including maximizing … positive events and minimizing … adverse events” (Project Management Institute, 2000). The Risk Response Planning phase is arguably the most important phase of the risk management process, since this is where appropriate actions are developed in the light of identified risks—both threats and opportunities. If effective responses are not developed and implemented, the risk process will fail, and the chances of the project achieving its objectives will be reduced.

D. Ensured the risk tolerance of the company was properly updated

C. Provided a proper risk response.

D, it is not about risk "response", it is about the risk tolerance

D. Project manager was totally surprised that risk tolerance is 20% which meant there are no documentation on this information available for the project manager. If this information is readily available for the project manager from the start, he could have plan for proper mitigation or inform stakeholders that the cost had overrun by 25% due to new tax regulation, and not continuing with the project.