Project risk alternatives

March 10, 2016

Q: Project risk alternatives
What happens if sum of probabilities of all alternatives are greater than 100%?

A: If you are using alternative outcomes to model a risk impact, then these means you have assigned the same type of risk outcome type (Cost, Schedule, etc.) for a single risk more than once as in the example below. In this example we have the same risk assigned to a task with the same risk outcome type (Schedule). There are four risk outcomes, each with 3% chance of occurring. If we look at the pie chart below we can see that overall the risk has a 12% chance of occurring.
Now what happens if the risk alternatives add up to more than 100%. In the example below, we have increased the first 2 alternatives to 70% and 50% respectively. If we add up all the risk chances, it should now equal 126%. However, risks can only have a probability between 0 <>100%. If the risk alternatives add up to greater than 100%, RiskyProject will add the risk alternatives and cumulatively add the probabilities until they reach 100%. In this example, we can see in the pie chart that now first risk with 70% chance will be fully accounted for. However, the second alternative will only add an additional 30% at which point the cumulative chance of the alternatives is now 100%. In addition the last 2 alternatives are ignored.

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