HKSM

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?

1. Risk-averse
2. Risk-neutral
3. Risk-seeking
4. 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.