Individual Risk Attitudes

PMBOK Guide 5th edition, Page 310-311: 'The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three frames:
* Risk appetite, which is the degree of uncertainty an entity is willing to take on in anticipation of a reward.
* Risk tolerance, which is the degree, amount, or volume of risk that an organization or individual will withstand.
* Risk threshold, which refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest.'

And it was further explained to me that Risk appetite can be:-
* Neutral
* Risk Adverse (errs on the side of caution)
* Risk Seeking (leans towards encouraging risks).

PMBOK Guide 5th edition, Page 310-311: 'The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three frames:
* Risk appetite, which is the degree of uncertainty an entity is willing to take on in anticipation of a reward.
* Risk tolerance, which is the degree, amount, or volume of risk that an organization or individual will withstand.
* Risk threshold, which refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest.'

And it was further explained to me that Risk appetite can be:-
* Neutral
* Risk Adverse (errs on the side of caution)
* Risk Seeking (leans towards encouraging risks).

This is one of the questions on my practice exam:
#1
A peer project manager has approached you and asked for your advise regarding stakeholder communication on his project. One of the key stakeholders who is involved in the project is considered risk-tolerant. How would you advise the project manager to communicate with that Stakeholder regarding project risk management?
A. As the stakeholder is sensitive to possible opportunities, include detailed information on the opportunities available to the project team.
B. As the stakeholder will see present risk-taking as a price worth paying for future pay-offs, include information on the current project risk assessment and the actions being taken to minimize threats and maximize opportunities.
C. As the stakeholder is highly reactive to risk, provide detailed information regarding the risk avoidance and risk exploitation strategies in place
D. As the stakeholder has a casual approach to or opinion about risks, set realistic expectations of both the threats and opportunities identified for the project.

And another:
#2
You are assuming the management of a project that is already in progress. Upon conducting a stakeholder analysis, you identify a stakeholder that you classify as risk-neutral. What is the best approach for risk communication with that stakeholder?
A. As they are sensitive to possible opportunities, offer them detailed information on the opportunities available to the project team.
B. As they will see present risk-taking as a price worth paying for future pay-offs, offer them information on the current project risk assessment and the actions being taken to minimize threats and maximize opportunities.
C. As they are highly reactive to threats, offer them detailed information regarding the risk avoidance strategies in place
D. As they do not want to be actively engaged in risk management, only give them information on general project status

So how did you answer on this?

A,B and C implies that the stakeholder has taken a position with regards to risk. But since his risk appetite is neutral, I am going with D. What did you answer?

#2 the answer is B. Risk neutral individuals will take risks if there is an anticipated future pay-off relative to the level of risk taken. They are not particularly sensitive to opportunities or highly reactive to threats.

Not sure I agree with you on this. This looks to me like a risk seeker. Are you sure of your answer ?

Risk neutral individuals will not pay extra to have the risk transferred to someone else, nor will they pay to engage in a risky endeavor. To them, money is money. They don’t pay for insurance, nor will they gamble.

I would chose D.