Final answer:
In project management, risks should be documented and managed through the risk response plan, which must be updated as risks evolve. The plan outlines strategies for potential threats and opportunities, reflecting the concept of asymmetric risk .
Step-by-step explanation:
Risks may change as a project progresses, and their changes should be documented and reflected in the correct element of project management. The question refers to several components that deal with risk, but the one which should reflect the dynamic nature of risks is the risk response plan. This plan includes strategies for dealing with identified risks, both threats and opportunities, and is meant to be updated as the project advances and as risks evolve.
When considering the provided Figure 20.1, it clearly distinguishes between two plans to address the potential threat. It outlines the concept of asymmetric risk, which weighs the outcomes of different approaches considering their potential impact. A rational choice is to avoid a catastrophic outcome, even at the cost of taking on some unnecessary actions. This decision-making is at the heart of developing and updating a risk response plan, in order to minimize potential threats to a project.
In this scenario, Plan B might be seen as an example of a risk response plan that aims to mitigate potential devastating threats, even when the likelihood of such events might be uncertain. The continuous reassessment of the situation and necessary updates to the response plan represents prudent risk management.