Qualitative and Quantitative Risk
Risk management has often been undertaken from one of two perspectives:
- Qualitative risk management where analysis is in terms of likelihood and impact
- Quantitative risk where three values are selected (worst case, most likely and best case) for either schedule and/or cost management. These are then run in a Monte Carlo simulation to better assess costs and time.
RiskValuer (an inbuilt feature within RiskOrganizer) is a new tool that enables qualitative risks with a direct cost impact to be assessed using a Monte Carlo simulation. This enables an assessment of the cost allowance for contingency to be made. This should then be compared with the estimate (which ideally should also have undergone a Monte Carlo simulation) to check that an allowance for the same risk has not inadvertantly occurred within both processes. If duplication has occurred then one of the assessments should be adjusted.
Additional information is contained in the following brochure