The Expected Monetary Value (EMV) is a quantitative risk analysis technique used to determine the average financial outcome of a future event that may or may not occur. It is calculated by multiplying the risk's probability of occurrence by its financial impact.

In this scenario:

Probability (P) = 60% or 0.60

Impact (I) = -$57,000 (a negative value representing a threat or loss)

EMV = P I = 0.60 (-$57,000) = -$34,200.

This value represents the contingency reserve that might be allocated to this specific risk.

B. -$57,000: This represents the full financial impact if the risk occurs, but it fails to factor in the 60% probability of the event happening.

C. -9,500: This is a result of an incorrect calculation and does not represent the EMV based on the provided data.

D. You will need to know the utility function of the organization to determine this: The utility function describes an organization's risk tolerance and is used for decision-making (e.g., choosing between different strategies), not for the mathematical calculation of the EMV itself.

---

1. Project Management Institute. (2017). The Standard for Program Management – Fourth Edition. Section 6.4.4.2

Quantitative Program Risk Analysis

p. 103. The standard defines EMV as a statistical concept calculated by multiplying the value of each possible outcome by its probability of occurrence.

2. Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition. Section 11.4.2.2

Decision Tree Analysis

p. 434. This section explains that EMV is a key concept in decision tree analysis and is calculated by multiplying the probability and impact of risks.

3. Hulett

D. T. (2009). Practical Schedule Risk Analysis. Project Management Institute. Chapter 3

"Risk Analysis Methods

" discusses the fundamentals of quantitative risk analysis

including the calculation of Expected Monetary Value (EMV) as a product of probability and impact.