Probability software can analyse risk

The systematic analysis of risks and their consequences was born out of the insurance industry. These measures work well in the...

The systematic analysis of risks and their consequences was born out of the insurance industry. These measures work well in the limited field of financial losses, but cannot and do not show the whole spectrum of risk that may face a project.

Project managers face a series of challenges including how to recognise and identify the risks that exist; how to express those risks in terms that those who face them can understand; how to make some objective judgement about the seriousness of the perceived risks and how to identify what options are available.

Software to identify risk falls into four broad categories.

lRisk identification aids: can guide the process of identifying risk issues and attach some measure of seriousness to them.

l Risk status monitors: allow the analyst or manager to record the risks that have been identified together with information about them. The systems may also contain some mathematical or ranking capability so that perceived risks can be presented in the order of the most serious to the least, each time the system is updated or interrogated.

lDecision-making aids: can help the process of dealing with risks when a choice is required. These systems are essentially analytical in character and the end-user may need to use their own judgement and think creatively to use them effectively.

lSimulation models: this aims to give a greater insight into the range of outcomes. However, although each of the above types of software seem mutually exclusive, there is some overlap between the categories.

The Project Manager's Guide to Handling Risk by Alan Webb is available from Gower Publishing

www.gowerpub.com
This was last published in April 2004

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