HKSM

A defined, measurable limit for how much deviation from a project objective is acceptable, set in line with the organization’s and stakeholders’ risk appetite.

Key Points

• Specifies measurable boundaries for variance from objectives (e.g., cost +/-5%, schedule +/-10 days).
• Can differ by objective, risk category, phase, or level (organization, program, project).
• Derived from the organization and stakeholders risk appetite and documented in the risk management plan.
• Exceeding the threshold triggers predefined actions such as escalation or implementing risk responses.

Example

A software rollout sets a cost threshold of +/-5% and a schedule threshold of +/-7 days. If a risk pushes the forecast to a 9% cost overrun, the team must escalate to the sponsor and activate a cost-containment response because the cost threshold has been crossed.

PMP Example Question

Which statement best describes a risk threshold?

1. The overall amount of uncertainty an organization is willing to pursue to achieve its objectives.
2. A specific, measurable limit that determines how much deviation from a project objective is acceptable before action is required.
3. A list of prioritized risks and their assigned owners.
4. A technique used to group risks by source for identification.

Correct Answer: B — A specific, measurable limit of acceptable deviation

Explanation: A risk threshold sets concrete boundaries for acceptable variance; option A describes risk appetite, not the threshold.