PMI Risk Management Professional (PMI-RMP) — Question 56

As per the risk analysis process carried out for a project, two risks are registered. The probability risk A will occur is 40% and its monetary impact to the project is US$100,000. The probability risk B will occur is 60% and its monetary impact to the project is US$20,000.

What is the total contingency budget that should be created?

Answer options

• A. US$120,000
• B. US$80,000
• C. US$52,000
• D. US$68,000

Correct answer: C

Explanation

To calculate the total contingency budget, you need to multiply the probability of each risk by its monetary impact: Risk A contributes 0.4 * 100,000 = US$40,000 and Risk B contributes 0.6 * 20,000 = US$12,000. Adding these amounts together gives US$40,000 + US$12,000 = US$52,000, which is the correct total contingency budget. The other options are incorrect as they do not reflect the accurate calculations based on the given probabilities and impacts.