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About Cost of Risk CalculationsThe Cost Risk calculation calculates the total cost of a risk and takes into account the risk mitigation plans linked to the risk. The Risk cost calculation is performed in the Risk Form tab of the Risk Information dialog box. The Cost of Residual Risk and Potential Loss are the only values that you can manually enter in the Risk Form. All other cost parameters are calculated. You can modify Risk Form to show or hide different fields. Cost Before Mitigation1. Enter Potential Loss(property “Cost before mitigation”): the loss in monetary terms if the risk occurs. This value can be entered manually if you select No for 'Auto calculation of expected loss (from Monte Carlo)' or if you don’t open a schedule.
2. If you don’t open a schedule, the Probability Before Mitigation value is based on the risk values entered in the Probabilities and Outcome tab of Risk Information dialog box. See Risk Probabilities and Impacts for more information. If you have a schedule Probability Before Mitigation comes from results of Monte Carlo simulations. 3. Expected Loss (property 'Pre-Mitigation Expected Loss') takes into account that the risk may not occur. It is an indicator that helps you to compare the costs of different risks. Expected loss can be calculated manually or automatically depending of selection 'Auto calculation of expected loss from Monte Carlo'.
4. Cost from Subprojects for RiskyProject Enterprise only (property 'Pre-Mitigation Expected Loss (Sub-Projects)') is an expected cost from all subprojects where “Auto calculation of expected loss (from Monte Carlo)” is 'Yes'. It is calculated only for summary projects and at the enterprise level. It is always zero for subprojects. Cost of Mitigation1. Cost of Mitigation is taken from Mitigation tab of Risk Information dialog box. It is the cost associated with efforts to reduce the probability and impact of the risk.
Cost After Mitigation2. Cost of Response Plan. 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.
3. Residual risk may still occur after the risk response and is cost is calculated as the Cost of Residual Risk.
4. Probability after Mitigation comes from Waterfall tab of Risk Information dialog box.
5. Expected loss after mitigation (property 'Post-mitigation Expected Loss') 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
Other Cost Indicators (Properties)1. Total Risk Cost after Mitigation = Expected loss after mitigation + Cost of Mitigation
2. 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. Saving from Mitigation = Expected Loss - Total Risk Cost after Mitigation
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