Risk Management Analysis

Risk Management Analysis
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Executive summary
By using the , Monte Carlo simulation of the palisade prediction, we shall carry out the Risk
analysis of the Financial management by conducting the Quantitative risk analysis using the
numerical values for the probability and the consequences of that risk. The basic analysis of the
basic budget is $ 135,000, $ 115,000, $ 100,000 and unit price 6. Now, using 9% of the use of
professional data, relevant data and expert opinions, the variance of project budgets, less than
10% of the sales price, and $ 115,000 as a result of the probability of $ 102,500 as a result of
total profit margin and total profit of the profit, analysis will be done. The change of sensitivity
risk analysis is less than 10% of the profit. At the same time, all the other parameters of the
remaining value will be $ 64,167, while they will find the basic cost of construction costs ($
75,000) and sales price ($ 100,000) at the same time will be done. If the sale model ($ 135,000)
and sales price ($ 135,000) would result in a $ 209,833 profit over this model, other parameters
would be 10% lower (ie $ 65,000), 103,500), its highest value ($ 115,000), and other All
variables are of their highest values, and then the project will have a loss of $ 11,167, which is
often less than -119% below the most likely profit of $57,833 will be done.
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Table of Contents
Project scope.................................................................................................................................................................... 4
Recommended baseline budgets........................................................................................................................................ 5
Sensitivity Analysis......................................................................................................................................................... 11
Risk event...................................................................................................................................................................... 12
Contingency recommendation........................................................................................................................................ 13
Most sensitive cost variable............................................................................................................................................ 14
Sensitivity analysis risk event......................................................................................................................................... 19
Comparing the baseline budget on the organization policy..............................................................................................23
Conclusion..................................................................................................................................................................... 23
Appendix....................................................................................................................................................................... 24
Reference....................................................................................................................................................................... 29
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Project scope
By implementing the Monte Carlo simulation of the palisade prediction in Microsoft
excel for calculating the numerical values of the probability and the consequences of risk by use
of the Quantitative risk analysis will be the main focus of this project. Out of the many
quantitative risk analysis techniques and tools available, which can aid the risk manager in e
valuating the understanding the nature of a risk, the Sensitive Analysis is the most common. This
examines the changing values in the risk variables to determine the effects on project outcomes.
Now, the various tools which a Risk manager can avail for the analysis of quantitative techniques
for this project are,
 Sensitivity analysis
 Probability analysis
 Event trees
 Fault trees
 Decision trees
 Monte Carlo simulation
 Influence diagrams
 Fuzzy set theory
 Artificial neural networks.
One of the most commonly used analytical methods is the Sensitivity Analysis method which is
used for all variable analysis on the risk management and which includes the following,
 Identification
 Analysis
 Treatment and control of risk events of the budget
 Schedule
 Profit
 Cost
 Duration
 Investment
 Baseline estimates
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There will be modules in the project as part of the analysis method. The first module will
evaluate the sensitivity analysis risk and the quantise analysis risk by analysing the base line
budgets. The Statistics of the risk analysis is the second module identified. The Probability of the
risk analysis is the third module. The Monte Carlo simulation of the risk analysis is the fourth
module. The fifth and the final module will be the Contingency analysis of the eestimate and this
allows the changes for the project when it will be implemented and investigated upon.
Recommended baseline budgets
For the base line budgets on the quantitative analysis on the uncertainly value , the below given
categories can be used for the quantitative risk analysis namely (Agile Project Management,
2013).,
1. Applying descriptive statistics
2. Frequency distribution
3. Central tendency
4. Measure of dispersion
Lot of ground work, collection of data, gathering of information is required when using the
Quantitative measurements of risks. Only if this is useful and assisting the risk management
process, should the efforts be taken for collection of all the vast data. Now depending upon the
data collection method, the personnel involved in the process of collection of the information and
the accuracy of the collected data will result in the validation of the quantitative process of the
analysis (Aven, 2011).
Event Tree
Event tree is an inductive analytical diagram in which an event is analyzed using Boolean logic
to examine a chronological series of subsequent events or consequences. For our project this
shall be sued to analyse the following factors,
 Risk analysis on the cost,
 Budgets
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 Duration
 Estimation of the budget baseline cost on the risk event on the budget
 Budget baseline cost to be specified.
Below is the representation of the “Event Tree” for our project,
Fault Tree
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Decision Tree
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Monte Carlo simulation
By substituting the range of values $632,167a probability distribution 32%for any factor that has
inherent uncertainty, the simulation for the risk analysis will be carried out by the Monte Carlo
tool for building the models for this project. The below diagram shows the investment results as
a diagram by using the Monte Carlo tool for calculating the results over and over, each time
using a different set of random values from the probability functions of the cost and profit
(Barnston, 2012).
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