Analyzing Risks
- Risks are potential problems that have not (or may not) arrive
- Problems are issues that have materialized and may compromise the project
- Project Management
- The process of minimizing typical project risks.
- Identify Risks
- Risks can be project, product, or business risks
- Analyze Risks
Styles of Analysis
Quantitative
$$\text{risk exposure} = \mathcal{P}(\text{risk}) \cdot \text{expected loss}$$
| Risk | Probability | Loss | Risk Exposure |
|---|---|---|---|
| devs unfamiliar | 80% | 5 weeks | 4 weeks |
| design not scalable | 10% | $40,000 | $4,000 |
Qualitative
Assign a heuristic risk level (categorical)
Which is better, qualitative or quantitative?
- People may relate better to qualitative
- Quantitative may give a false sense of precision
- Qualitative will have a common unit of measure
Estimation Techniques
- Expert Opinion
- Cost Modeling
- Simulation
Prioritize Risks
Other Considerations
- Catastrophic Events
- Compound Risks
- Confidence in Estimates
- Risk Response
- Action Plans
- Avoidance
- Risk Transfer
- transfer responsibility to someone else (think insurance industry)
- Mitigation
- Buying Information
- spend time gathering more information
- Contingency Plans
- Risk Acceptance
- Action Plans
- Monitor and Evaluate Changing Risks
- Risk Response Plan
$$ \text{Risk Reduction} = \frac{\text{Risk Estimate Before} - \text{Risk Estimate After}}{\text{Reduction Cost}} $$