HKSM
Risk Seeking
A utility-function stance where a stakeholder favors higher-risk choices, even when they offer only a small potential increase in project value or benefits.
Key Points
- Reflects a convex utility curve: uncertain outcomes with potential upside are preferred over safer options of similar expected value.
- Leads to selecting high-variance strategies and more aggressive opportunity responses (exploit, enhance).
- Must align with organizational risk appetite and tolerances and be recorded in the risk management plan.
- Impacts reserve planning and decision techniques (e.g., EMV adjusted by utility) and requires clear stakeholder communication.
Example
A product sponsor chooses an unproven cloud service that might cut costs by 3% but carries notable integration risk, preferring the uncertain upside over a stable vendor with nearly the same expected benefit.
PMP Example Question
During release planning, the sponsor consistently selects options with higher uncertainty for only a minor potential gain in benefits compared to safer alternatives. Which utility-function category best describes the sponsor?
- Risk-averse
- Risk-neutral
- Risk-seeking
- High risk appetite but risk-averse utility
Correct Answer: C — Risk-seeking
Explanation: Choosing greater uncertainty for a small possible increase in benefit indicates a risk-seeking utility preference.
