Expected Loss

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.

Moderator: Intaver Support

Post Reply
kp56
Posts: 17
Joined: Wed Jan 18, 2006 3:38 pm

Expected Loss

Post by kp56 » Wed Nov 23, 2022 7:37 pm

In RiskyProject Expected loss is calculated parameter. Could you please explain the calculating algorithm?

Intaver Support
Posts: 989
Joined: Wed Nov 09, 2005 9:55 am

Re: Expected Loss

Post by Intaver Support » Wed Nov 23, 2022 7:41 pm

Expected cost of risk is calculated based on formula:
-------------------------------------------
(Mean cost of project - Original (deterministic) cost of project) * cost correlation coefficient of this risk
-------------------------------------------
It means that expected cost is this is a contribution of each risk to total cost increase of project. Interestingly that the mean cost of task, where this risk is assigned, is not in this formula directly. It is a correlation, which is used. The correlation coefficient is calculated based on total project cost and cost increase due to risk.
Intaver Support Team
Intaver Institute Inc.
Home of Project Risk Management and Project Risk Analysis software RiskyProject
www.intaver.com

Post Reply