Why don't we just create the Contingency Reserve with the full cost of each Risk? Why multiply by the probability first? What would be wrong with having a Contingency Reserve which covered the actual project costs if all Risks occurred?
A) Creating a Contingency Reserve with the full cost of each risk would lead to overestimation of the budget needed for the project. Multiplying by the probability first allows for a more accurate allocation of resources based on the likelihood of each risk occurring.
B) Having a Contingency Reserve that covers the actual project costs if all risks occurred would result in excessive budget allocation, which may not be cost-effective.
C) Both A and B are correct.
D) None of the above.