The key means of defending against forecasting risk is to:
A) rely primarily on the net present value method of analysis.
B) increase the discount rate assigned to a project.
C) shorten the life of a project.
D) identify sources of value within a project.
E) ignore any potential salvage value that might be realized.

Question

Quizplus · Accepted Answer

The best way to defend against forecasting risk is to identify sources of value within a project. By doing this, the project team can focus on creating and maximizing these sources of value, which can help mitigate the impact of unexpected changes in the forecasted outcomes. Reliance on net present value or increasing the discount rate can provide a more conservative estimate, but may not necessarily defend against forecasting risk. Shortening the life of a project or ignoring potential salvage value are also not effective ways to defend against forecasting risk.

The Key Means of Defending Against Forecasting Risk Is To