Glossary

Monte Carlo

The mathematical method used on risk analysis. Monte Carlo simulations are used to approximate the distribution of potential results based on probabilistic inputs. Each simulation is generated by randomly pulling a sample value for each input variable from its defined probability distribution. These input sample values are then used to calculate the results (in RiskyProject, it is project schedule parameters: project duration, start and finish times, success date, and cost). This procedure is then repeated until the probability distributions are sufficiently well represented to achieve the desired level of accuracy. The probability distribution to be used for these inputs is dependent on the types of numbers you want to generate.