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Quantitative Risk Assessment (QRA)

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Added on  2021-05-03

Quantitative Risk Assessment (QRA)

   Added on 2021-05-03

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Quantitative Risk AssessmentQuantitative risk assessment is an assessment that asses numerically the overall effect of allidentified project risks on project objectives. It calculates an exact monetary impact on a project, incase a risk materializes, and its probability as a percentage. There are several techniques in quantitative risk assessment.Sensitivity AnalysisA quantitative risk analysis and modeling technique used to help determine which risks have themost potential impact on the project. It examines the extent to which the uncertainty of each projectelement affects the objective being examined when all other uncertain elements are held at theirbaseline values. The typical display of results in the form of tornado diagram. The longer the bar, the more sensitive the project objective is to the risk.The risks are presented in descending order with the largest impact on the top and the leastimpact on the bottom.It allows the team to focus on those risks with the greatest impact on a project objective.Decision TreeA diagramming and calculation technique for evaluating the implications of each of the availablechoices and possible scenarios. It incorporates the cost of each available choice the probabilitiesof each possible scenario and the reward of each alternative logical path. Solving the decision tree provides the EMV (or other measure of interest to the organization) foreach alternative, when all the rewards and subsequent decisions are quantified.Expected Monetary Value Analysis (EVM)EMV analysis is statistical concept that calculates the average outcome when the future includesscenarios that may or may not happen. (I.e. analysis under uncertainty) The EMV of opportunities will generally be expressed as positive values, while those of riskswill be negative.EMV is calculated by multiplying the values of each possible outcome by its probability ofoccurrence, and adding them together.A common use of this type of analysis is in decision tree analysis. Modeling and simulation arerecommended for use in cast and schedule risk analysis, because they are more powerful and lesssubject to misuse that EMV analysis.
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