Final answer:
Project managers can create a risk management plan to respond to risks, particularly in the case of asymmetric risks where the threat could be catastrophic. This is a proactive approach aimed at mitigating potential high-consequence events, similar to how one might purchase insurance.
Step-by-step explanation:
Project managers can indeed respond to risk by creating a risk management plan. This is a true statement. The reason behind this is the concept of asymmetric risk, which is highlighted in figure 20.1. When facing potentially catastrophic threats, it is wise to formulate mitigation plans. The consequence of not preparing for such threats could be disastrous, akin to a 'game over' scenario.
On the other hand, if the threat does not materialize, the only cost is the time and effort invested in the planning process. This approach is similar to purchasing insurance; one mitigates the impact of low-probability but high-consequence events. The probability and consequences of risks must be weighed, and even risks with a low probability of occurrence must be planned for if the potential damage is significant.