PMI-RMP Risk Appetite and Tolerance

Question 1

How is risk appetite best defined in the PMI-RMP framework?

Accepted Answer

The amount of risk an organization is willing to pursue to achieve objectives

Answer

The total budget allocated for risk contingency

Answer

The number of risks identified in the risk register

Answer

The probability that all risks will occur

Question 2

Risk tolerance differs from risk appetite in that risk tolerance refers to:

Accepted Answer

The acceptable variation around a specific objective or threshold

Answer

Long-term strategic risk preferences

Answer

The risk identified in the risk register

Answer

The risk owner's personal opinion

Question 3

Who is primarily responsible for defining an organization's risk appetite?

Accepted Answer

Senior leadership and the board of directors

Answer

Individual project managers

Answer

The project team

Answer

External auditors

Question 4

A project sponsor states the project can tolerate a cost overrun of up to 10% but no more. This is an example of:

Accepted Answer

Risk threshold

Answer

Risk appetite

Answer

Risk transfer

Answer

Risk avoidance

Question 5

When a risk exceeds the defined risk threshold, what action should the project manager take?

Accepted Answer

Escalate to the appropriate authority per the risk management plan

Answer

Ignore it until the next reporting period

Answer

Immediately close the project

Answer

Delete the risk from the register

Question 6

How does a risk-averse organization's behavior differ from a risk-seeking organization?

Accepted Answer

A risk-averse organization prefers lower uncertainty even at the cost of potential gains

Answer

A risk-averse organization pursues high-uncertainty projects for maximum gain

Answer

Both behave identically

Answer

A risk-averse organization ignores risk management