I'm looking for the answer to this question and how u got it. Which of the following best explains why total risk is used in project analysis?

I'm looking for the answer to this question and how u got it.

Which of the following best explains why total risk is used in project analysis?

1) Insolvency & bankruptcy may result from high total risk

2) It is impossible to estimate a project's beta

3) A firm's projects are mutually exclusive

4) Shareholders diversify their investment in many projects