Risk correlations

This forum includes discussion about project risk analysis and risk management theory: Monte Carlo simulations, Event Chain Methodology, schedule and cost risk analysis. Please submit questions and case studies about your experience with our project risk analysis software.

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Karmal S.
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Location: Canada

Risk correlations

Post by Karmal S. » Tue Dec 04, 2007 5:47 pm

Can I enter correlations between different risks?
Karmal S.
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New Product Development

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Post by Intaver Support » Tue Dec 04, 2007 5:50 pm

For both local and global risks you may enter correlations between different risk. In fact correlations in RiskyProject is implemented by setting up the same seed for different risks. RiskyProject does not ask you to enter a correlation coefficient. All risks have strong positive correlations.
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David
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Post by David » Tue Jan 15, 2008 5:41 pm

I did not understand how can I enter information about risk correlations in RiskyProject?
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Post by Intaver Support » Tue Jan 15, 2008 5:55 pm

Risk Correlations can be entered in Risk Information Dialog for local and global risks. You may access this dialog by double clicking on RiskID within a list of local risks or in global risk view. You need to select the risk, current risk will be corrected with.
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Sornix
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Post by Sornix » Fri Aug 22, 2008 3:52 pm

RiskyProject offers strong positive correlation between risks (coefficient 1). Is it possible to define correlation coefficient not equal 1, for example 0.5?
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Post by Intaver Support » Fri Aug 22, 2008 3:54 pm

We did not implement different correlation coefficient simply because our client did not ask about it. However we are planning to implement it next year in RiskyProject 4.
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Post by Intaver Support » Sat Oct 18, 2008 11:06 pm

Strong correlation between different risks in most real life project is quite sufficient. For example you have risk "Change requirements". This risk would be strong correlated with risk "Budgetary Problems". Please remember, that correlation does not mean causation. "Change requirements" would not cause "Budgetary Problems" and vice versa. Both risks most likely occur together because they would be triggered by the same factor.
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remi7
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Post by remi7 » Fri Jul 24, 2009 8:47 am

I have the same risk assigned the two different tasks. Are two risk assignments correlated with each each other?

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Post by Intaver Support » Fri Jul 24, 2009 8:53 am

No. Each risk assignment is completely independent. For example risk "Budgetary Problems" can be assigned to task Development and task Implementation. But if "Budgetary problems" occur during development it does no mean that it will occur during Implementation.

On order to correlate risk assigned to different tasks, you should use Risk Correlation tab in Risk Information Dialog (Global and Local Risk Assignment).
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Interstate
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Risk relationships parent child

Post by Interstate » Wed May 19, 2010 9:28 pm

Is it possible to define risk relationships, parent/child etc in RiskyProject. A Risk that can cause additional risks where the first risk is the parent and the second is the child?

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Defining relationships between risks

Post by Intaver Support » Wed May 19, 2010 9:31 pm

In the upcoming version 4, you will be able to clearly identify trigger risks (parent) and residual (child) relationships for a particular risk. You define this relationship in the Properties tab of the Risk Information dialog box.
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RiskUser
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Risk relationships

Post by RiskUser » Tue Jul 06, 2010 12:02 pm

By defining these relationships, does this define an risk event chain?

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Risk relationships

Post by Intaver Support » Mon Jul 19, 2010 11:01 am

The new risk form will allow you to define trigger and residual risks for each identified risk. This is for reporting purposes and as seen in the current requirements will not define an actual correlation between the risks for purposes of Monte Carlo simulations.

The ability to define correlations using the risk triggers and residual risks as part of Monto Carlo simulations is currently in our development plans.

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Re: Risk correlations

Post by Intaver Support » Thu Aug 09, 2012 2:33 pm

By default in RiskyProject all risks and risk assignments not correlated. For example if risk A assigned to task B and task C, these risk events are not correlated. It is done because very often risk represents very general potential events, such as budgetary problem. Particular manifestation of this event could occur in different period of times.
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Home of Project Risk Management and Project Risk Analysis software RiskyProject
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