Munster fell to their seventh RaboDirect PRO12 defeat of the season at Treviso on Sunday as the Italian outfit ran out 34-10 winners at the Stadio Comunale di Monigo.
The defeat leaves Munster just six points and two places off the RaboDirect PRO12 top four with six games of the regular season remaining however Penney doesn't see it that way.
Munster are now 13 points shy of Irish rivals Leinster in third place with coach Penney admitting they will need to be near-perfect - and lucky with results - to keep themselves in contention.
"We're not out of it but it means we need to have some great performances from here on in, plus we are relying on other teams to succumb, which isn't ideal," said Penney told the Irish Examiner.
"It's going to be a test of mental fortitude and resilience now, and all the other words you throw out when the sun goes behind a big black cloud.
"We're in a professional sporting environment and guys need to make sure they are in the right mental place to front up again. If they don't, they won't survive in the game.
"I expected our boys to show more courage and fortitude. Some players need to take a long hard look at themselves after that.
"We were soft, we lacked courage, Benetton ripped into us and got the deserved outcome. Without taking away from them, that was definitely our most disappointing performance of the season."
Guinness PRO12 Munster News
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