### Expected Loss

Posted:

**Wed Nov 23, 2022 7:37 pm**In RiskyProject Expected loss is calculated parameter. Could you please explain the calculating algorithm?

This forum includes discussions about project risk analysis software and project risk management software RiskyProject: theory, software features, best practices, possible problems, and user experience.

https://www.intaver.com/IntaverFrm/

Page **1** of **1**

Posted: **Wed Nov 23, 2022 7:37 pm**

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

Posted: **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.

-------------------------------------------

(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.