wht do you think on this Risk ?

You are managing a chain of sensitive production process for a chemical plant of your organization. This project is severely budget constrained. One
of the units is located in a politically sensitive area and an unexpected disturbance has increased the project budget by 15%. What should be the risk
response strategy in this case?
Options:
A: Accept
B: Avoid
C: Expolit
D: Transfer
 

Answer is A,  but my anser was D to transfer with an insurance.

as we can avoid political instability....is that correct?

 

With the description given, You have no option but to accept the Risk.

With further analysis, one can get in to mitigation.

sorry, the answer given was to Avoid which is B!  (it was my typo)

any justification for Avoidance?

 

 The answer is probably B, because exploit is not a risk handling option, and other two may incur more costs...

 Here, note that the project is severely budget constrained and one of the unit has increased the budget by 15%.  It is also in a politically sensitive area.  As the budget does not allow for increases and considering the other factor, it is better to close the unit. So, the risk is eliminated here.

Risk avoidance is nothing but eliminating the risk.  Hence, the answer should be 'B'.

Risk transference will not be the answer as firstly there is no risk of natural calamity explained here like fire etc.  Also, to transfer risk, you need to pay the premium amount, which will not be allowed by the budget constraints.

I think the question is not correct...because they say that risk has already occured...look at the sentence " an unexpected disturbance has increased the project budget by 15%", this sentence for me means the risk has already occured....and the answers are related to Risk Response topic....if the risk has occured and it was not identified then you need to implement work arounds if you have to stick to all of your baselines

so I don't know how can we answer this question...

any other inputs from anyone?

I think the best answer is to Avoid.

PMBOK 5th ed. defines avoiding as "a risk response strategy whereby the project team acts to eliminate the threat or protect the project from its impact."  (p.344).  In this case, the budget is already constrained and implementing a risk response to avoid will ensure that the budget is not put at further risk.

If you choose to transfer, then you are simply transferring to someone else who now is responsible for managing it.  With a threat such as this one, that is so unpredictable, I'm not sure that simply handing off responsibility to a third party is the right choice.  The project is still at considerable risk because you can't really determine that a risk response implemented in response to political chaos will stabilize the project.  The only thing that will ensure this is if the political situation would resolve itself.

Therefore I would pick B.

Tina W., PMP

 

Lots of people have said the choice is 'B' to Avoid the risk, with no suggestion as to how to Avoid it. The sole reason to Avoid risk is given as the increase in budget by 15%. One suggestion has been made to shut down the plant. I think that's a stretch. Just imagine how costly it would be to shut down a functioning plant. Also, it means a new plant needs to be set up to compensate for the closed plant.

It would be easier to lobby and get a budget increase of 15% than closing an operational plant and setting up of a new one.

I will go with A, Accept the risk (and then make the case for a budget increase). After all, there are projects with CPI > 1.   Sh%&* happens, you know...

 

Regards.

 

I could not go for avoidance as there is no room any more. asdescribed that the risk as already occured, i agree to Accept it.

Please post if any other views.