Which of the following risks represents the highest level of risk to the project?
Which of the following risks represents the highest level of risk to the project?
To determine the highest level of risk to the project, we calculate the expected cost of impact for each option, which is the product of the likelihood of failure and the potential cost of impact. For option A: 1% of $1,000,000 equals $10,000. For option B: 10% of $500,000 equals $50,000. For option C: 20% of $150,000 equals $30,000. For option D: 5% of $500,000 equals $25,000. Option B has the highest expected cost of impact, therefore it represents the highest level of risk to the project.
The answer should be D because the failure is 5 % and the impact for it is 5,00,000. which is high than the option B.
Likelihood to fail and impact is higher
Correct Ans - D
B. Likelihood of failure = 10%, potential cost of impact = $500,000.
B is correct