## Calculating the Cost of Residual Risk

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NTT
Posts: 23
Joined: Sun May 27, 2007 4:51 pm
Location: Boston, MA

### Calculating the Cost of Residual Risk

In RiskyProject’s Cost of Risk After Mitigation in the Risk Properties, how can we calculate the “Cost of Residual Risk”. There doesn’t seem to be anyway to automatically calculate this, so what do you suggest?
risk manager

Intaver Support
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Joined: Wed Nov 09, 2005 9:55 am

### Re: Calculating the Cost of Residual Risk

In most cases, the “Cost of Residual Risk” is the same as the Potential loss. This may sound odd, but mitigation plans normally only lower the probability of risks as this is the most cost efficient. Experience shows that lowering the impacts of a risk often are normally not cost effective. However, if plans include a lowering of potential impacts, you can either estimate this or use scenario analysis with multiple baselines (http://intaver.com/IntaverFrm/viewtopic ... ario#p3218) to generate a post-mitigated cost.
Intaver Support Team
Intaver Institute Inc.
Home of Project Risk Management and Project Risk Analysis software RiskyProject
www.intaver.com

NTT
Posts: 23
Joined: Sun May 27, 2007 4:51 pm
Location: Boston, MA

### Re: Calculating the Cost of Residual Risk

Does the Cost of Response plan as part of the post-mitigation cost calculation have any impact on the simulation results.
risk manager

Intaver Support
Posts: 921
Joined: Wed Nov 09, 2005 9:55 am

### Re: Calculating the Cost of Residual Risk

If you have assigned a cost to a mitigation plan and assigned it to a risk this is used only for the post-mitigation calculation and does not affect the simulation results.

For example, we create a response plan in the Mitigation/Response view with a Cost of \$25000.

When then assign the response plan in the Risk Information > Properties tab.

The Cost of the response plan is added to the Cost after mitigation calculation.

If you want to include the probabilistic costs of a response plan into your Monte Carlo simulation, response plans can be assigned to specific activities.
Intaver Support Team
Intaver Institute Inc.
Home of Project Risk Management and Project Risk Analysis software RiskyProject
www.intaver.com