How should a risk manager increase stakeholder risk appetite?

Project stakeholders can often be risk averse with little to no knowledge of the risk process .

How should a risk manager increase stakeholder risk appetite?
A . Exclude risk averse stakeholders from future risk discussions
B . Explain risk handling and mitigation strategies
C . Increase the impact of all risks in the risk breakdown structure (RBS)
D . Develop a generous probabilistic cash flow model

View Answer

Answer: B

Explanation:

The risk manager should increase stakeholder risk appetite by explaining risk handling and mitigation strategies, which will help stakeholders understand how risks can be managed and reduced, making them more comfortable with the risk process.

The best way to increase stakeholder risk appetite is to explain risk handling and mitigation strategies, which are the actions taken to reduce the probability and/or impact of risks, or to enhance the opportunities. By doing so, the risk manager can help the stakeholders understand how the risks can be managed effectively and efficiently, and how the potential benefits can outweigh the potential costs. This can also increase the stakeholder confidence and trust in the risk process and the project outcomes. The other options are not appropriate ways to increase stakeholder risk appetite. Excluding risk averse stakeholders from future risk discussions can alienate them and create conflicts. Increasing the impact of all risks in the risk breakdown structure (RBS) can exaggerate the risk exposure and create unnecessary fear and anxiety. Developing a generous probabilistic cash flow model can create unrealistic expectations and lead to poor decision making.

Reference: PMI Risk Management Professional (PMI-RMP) Examination Content Outline and Specifications, page 8 1. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) C Sixth Edition, pages 403-4042.