Project Risk Management Risk Appetite, Tolerance & Governance

Question 1

Which term describes the amount and type of risk an organization is willing to accept in pursuit of its objectives?

Accepted Answer

Risk appetite

Answer

Risk threshold

Answer

Risk velocity

Answer

Risk exposure

Question 2

How does risk tolerance differ from risk appetite?

Accepted Answer

Risk tolerance is the acceptable variance around specific objectives, while risk appetite is the broader strategic willingness to accept risk

Answer

They are interchangeable terms in project risk management

Answer

Risk tolerance applies only to financial risks

Answer

Risk appetite is set by the project team, not the organization

Question 3

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

Accepted Answer

Senior leadership and the board of directors

Answer

The project manager

Answer

Individual risk owners

Answer

The project management office (PMO)

Question 4

A project team identifies a risk that falls within the organization's risk tolerance. What is the appropriate response?

Accepted Answer

Accept the risk and monitor it passively

Answer

Escalate it immediately to the sponsor

Answer

Apply an aggressive mitigation strategy

Answer

Transfer the risk to a third party

Question 5

Which governance body is typically responsible for overseeing risk management practices on large projects?

Accepted Answer

Risk management committee or steering committee

Answer

The project scheduler

Answer

Individual team leads

Answer

The client's procurement department

Question 6

What document formally establishes how risk appetite and thresholds are applied within a project?

Accepted Answer

Risk management plan

Answer

Project charter

Answer

Risk register

Answer

Communications management plan