About Cost of Risk Calculations
Risk cost is a calculates the total cost of a risk that takes into account the risk mitigation plans linked to the risk. The Risk cost calculation is performed in the Properties tab of the Risk Information dialog box.
Risk cost calculation
1. Enter Potential Loss: the loss in monetary terms if the risk occurs.
2. Probability before information comes from Probabilities and Outcome tab of Risk Information dialog box. See "Risk Probabilities and Impacts" for more information.
3. Expected Loss takes in to an account the fact that risk may not occur It is an indicator that helps you to compare the costs of different risks.
4. Cost of Mitigation is taken from Waterfall tab of Risk Information dialog box. It is the cost associated with efforts to reduce the probability and impact of the risk.
5. Even if mitigation plan is executed as planned, there will still be a cost associated with a risk as it is possible to reduce risk, but not to eliminate it (an exception is when you are able to Avoid the risk through early planning). The response plan may be executed if the risk occurs and will be calculated using the cost entered for the response plan associated with this risk. This cost is entered Mitigation and Response view.
6. Residual risk may still occur after the risk response and is cost is calculated as the Cost of Residual Risk.
7. Probability after Mitigation comes from Waterfall tab of Risk Information dialog box.
8. Expected loss after mitigation takes in to an account the fact that risk may not occur. Expected loss after mitigation = (Cost of Response Plan + Cost of Residual Risk ) * Probability after information
9. Total Risk Cost after Mitigation = Expected loss after mitigation + Cost of Mitigation
10. Saving from Mitigation is a difference between costs with and without mitigation. If this number is negative mitigation efforts will not lead to cost saving.