Calculation of risk impact

General discussion and questions about project risk management and risk analysis software RiskyProject. Includes discussion on how to perform efficient project risk analysis using our software.

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Col
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Calculation of risk impact

Why are calculated risk impacts are different for individual projects as compared to a project portfolio in RiskyProject enterprise?
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Intaver Support
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Joined: Wed Nov 09, 2005 9:55 am

Re: Calculation of risk impact

Imagine you are planning a supply convoy out to a refugee camp that is comprised of many trucks with varying loads, some load are much more critical than others. The trucks that carry the most critical supplies (e.g. medical) have a higher priority, they need to get there as quickly as possible. Whereas other trucks may be carrying less critical supplies and delivery time is less important, therefore they have lower priority.

Now when we are planning each vehicle has a risks that could delay the trip. For each vehicle, depending upon their age, make, etc., each risk might have its own probability and impact. The driver of the each truck can prioritize these risks and manage them accordingly. However, if we look at the convoy as a whole, we then need to manage the risks at the convoy level we understand how each risk could affect the convoy and the appropriate level at which to manage them.

For example, there are two risks that have been identified. One is “flat tires” and the other is “reluctance of local groups to allow safe passage”. Now on some trucks, the tire may have just been replaced and the chance that a flat will occur is relatively low, whereas in others, the opposite may be true. Depending on the priority of the trucks cargo, the risk score for each truck may be different even if they have the same probability of this occurring. In this case, you will allow each crew to assess and manage this risk on a truck by truck basis. If many of the high priority trucks will be impacted by this risk, the risk score will be higher. In this case, you may decide to manage this risk at the convoy level. If we look at the risk of being granted safe passage we will see that it will impact every truck in the convoy and this case must be managed by the convoy leaders.

Now if we replace trucks with projects and convoy with portfolio, we can see that each project can have the same risk, but with different risk scores. If we then look at the overall impact of the risks at a higher level, it may provide additional information regarding appropriate management actions to address the risk.

Here is an example how calculated impact is presented in risk register for RiskyProject Enterprise.

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