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
Explanation
The CEO's executive decision to start and complete the top 25 revenue-producing stores in the first year shows a risk-seeking or risk-taking attitude. This means that the CEO is willing to accept higher risks for higher rewards, and sees risks as opportunities rather than threats. The CEO is not avoiding, mitigating, or neutral to the risks involved in the remodeling project, but rather embracing them and pursuing them aggressively. This may result in increased revenue and customer satisfaction, but also exposes the organization to potential losses and disruptions. References:
Risk Attitude in Project Management: Definition, Types & Example, Web Article, August 2022 Risk Appetite vs. Risk Tolerance: What is the Difference?, Web Article, October 2022 CBAP / CCBA Certified Business Analysis Study Guide, 2nd Edition, Chapter 3: Strategy Analysis, p.
95-96
Certified Business Analysis Professional (CBAP) Specialization, Course 3: Business Analysis:
Strategy Analysis, Week 1: Strategy Analysis Overview, Video: Risk Analysis