The Missing Words in a Risk Budget and its Significance

B.

The missing words in the sentence are related to the concept of funding specific management responses to a project's threats and opportunities, which is known as risk management. The purpose of a risk budget is to set aside funds to address potential risks or opportunities that may arise during a project.

Option A, change budget, is not the correct answer, as it refers to a budget for making changes to a project, rather than a budget for managing risks.

Option B, project budget, is also not the correct answer, as the project budget typically includes funding for the entire project, including both planned and unplanned activities, and does not specifically address risk management.

Option C, project's cost tolerance, is also not the correct answer, as it refers to the amount of variation in project costs that is acceptable to the project stakeholders, and does not address the funding of specific risk responses.

The correct answer is option D, project's risk tolerance. A risk tolerance refers to the amount of risk that a project team is willing to accept or tolerate in pursuit of project objectives. A risk budget is based on the project's risk tolerance and is set aside specifically to fund the management of risks and opportunities that fall within that tolerance level.

In summary, a risk budget is a sum of money set aside to fund specific management responses to a project's threats and opportunities, and it is based on the project's risk tolerance. Therefore, the missing words in the sentence are "project's risk tolerance."