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Question 324

A popular department store chain wants to make computer upgrades as well as conduct a major remodeling effort to increase revenue to all their 100 stores over the next 2 years. The remodeling will occur in two phases. The two phases are required at each store and can be completed in any order, but each phase must be fully completed before the next phase can begin. Phase 1 will take approximately 32 weeks and will not require a store to be temporarily closed. Phase 2 will take approximately 20 weeks and will require a store to be temporarily closed.

In order to keep inventory level and total revenue for the department store chain at an operational level, 75% of the stores must remain open to the public at all times. Against the board of director's advice, the Chief Executive Officer (CEO) made a decision to start and complete the top 25 revenue-producing stores in the first year to get those stores remodeled and fully operational.

A business analyst (BA) has been brought in to help with planning the project and gathering requirements.

Based on the CEO's executive decision, which risk tolerance attitude is the CEO exhibiting?

    Correct Answer: A

    The CEO is exhibiting a seeking risk tolerance attitude. By choosing to start with the top 25 revenue-producing stores, the CEO is willing to accept the risk of temporarily closing these high-revenue stores in the short term in exchange for the potential higher returns once those stores are remodeled and fully operational. This decision reflects a willingness to take on more risk to achieve greater potential value, which aligns with a seeking attitude.

Discussion
Kakashi_SenseiOption: A

Tricky but I feel this may be Seeking. The reason is the CEO chose to start with the top 25 revenue-producing stores

siliconvalleykamOption: A

Seeking

SavvyBAOption: B

It's avoidance because by starting with the top 25 revenue producing stores, he's pushing to reduce the risk of lost revenues later, by being able to complete the best producing stores first, and then they can be back up and operational earlier in the phase than the other stores.

mdadewale

This risk tolerance attitude is "seeking"

WolfedaleOption: A

It's seeking because he's risking the highest revenue loss in the front end of the project. Outside the box thinking - If all the highest revenue stores close at the same time, it's easy for competitors to sweep up the customers during that time leading to further revenue loss for the company overall.

OlivierPaudexOption: B

Answer is B (Avoidance) Risk-seeking : A willingness to accept risk to increase revenue. Risk-avoidance : The risk is low or removed or plan to mitigate it is taken Risk-mitigation : Reduce the risk with a plan if risk occurs In this case, the risk is low. If 25 shops are closed, we are still in the remaining 75% open shops. No need to take a risk-seeking attitude, risk-avoidance is enough for the same result.

OlivierPaudex

I would rather go for Answer A (seeking) because of the words : "Against the board of director's advice...". It's clearly a personal decision of the CEO.

xiaoyangwuOption: A

BABOK V3 6.3.4.4: In general, there are three broad ways of describing attitude toward risk: • Risk-aversion: An unwillingness to accept much uncertainty; there may be a preference to either avoid a course of action which carries too high a level of risk, or to invest more (and therefore accept a lower potential value) to reduce the risks. • Neutrality: some level of risk is acceptable, provided the course of action does not result in a loss even if the risks occur. • Risk-seeking: A willingness to accept or even take on more risk in return for a higher potential value. -----------Only A and D are listed in BABOK, so B is not correct, I prefer A

[Removed]Option: A

My option is Seeking. The reason is that CEO made the decision against the board. B and C are not options, because no such attitude toward risk D definition is "Neutrality - some level of risk is acceptable, provided the course of action does not result in a loss even if the risks occur." In our case, if the risk occurs the top revenue -provided stores will not work and there is no plan how to manage it

Anhnguyen123Option: A

A because of question is risk tolerance attitude following 6.3.4.4 : Risk Tolerance = Risk - aversion, Neutrality; Risk - seeking. B C are the risk treatment following 10.38

ShreejithOption: D

Neutrality: some level of risk is acceptable, provided the course of action does not result in a loss even if the risks occur.