A product owner is assessing a risk-response option in the backlog. There is a 30% probability of a $200,000 loss if a security defect ships, and a 70% probability of no loss. What is the expected monetary value (EMV) of the risk that a mitigation story should be weighed against?

Question

Accepted Answer

−$60,000. EMV = Σ (probability × impact) = (0.30 × −$200,000) + (0.70 × $0) = −$60,000. Any mitigation costing less than $60,000 is economically justified. Option B uses full impact ignoring probability; C uses the wrong 70% probability; D adds spurious values.

A product owner is assessing a risk-response option in the backlog. There is a 30% probability of a $200,000 loss if a security defect ships, and a 70% probability of no loss. What is the expected monetary value (EMV) of the risk that a mitigation story should be weighed against?

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