Risk management tools

Risk management is a non-intuitive field of study, where the most simple of models consist of a probability multiplied by an impact. Even understanding individual risks is difficult as multiple probabilities can contribute to Risk total probability, and impacts can be "units" of cost, time, events (for example, a catastrophe), market states, etc. This is further complicated by there being no straightforward approach to consider how multiple risks will influence one another or increase the overall risk of the subject of analysis.

Risk management tools allow planners to explicitly address uncertainty by identifying and generating metrics, parameterizing, prioritizing, and developing mitigations, and tracking risk. These capabilities are very difficult to track without some form of documentation or, with the advent of information technology, software application. Simple risk management tools allow documentation. More sophisticated tools provide a visual display of risks, while the most cutting edge, such as those developed by Air Force Research Laboratory Headquarters, are able to aggregate risks into a coherent picture.

Notable tools (partial)

• Capital asset pricing model – Used to determine the appropriate required rate of return of an asset, if that asset is added to an already well diversified portfolio, based on non-diversifiable risk.^[1]

• EasyRisk Manager – A Web-based project, business, and enterprise risk management tool; highly extendable to relate risk to any business model.

• IBM OpenPages GRC Platform – Integrated enterprise governance, risk and compliance solution that includes modules for operational risk management, policy and compliance management, financial controls management, IT governance, and internal audit management

• Probabilistic risk assessment (PRA, also called Probability Consequence or Probability Impact Model) – Simple model where estimates of probability of occurrence are multiplied by the consequence (e.g., cost or schedule delay).

• Reference class forecasting – Predicts the outcome of a planned, risky action based on actual outcomes in a reference class of similar actions to that being forecast.^[2]

• RiskAoA – A predictive tool used to discriminate between proposals, choices, or alternatives, by expressing risk for each as a single number, so a proposal's trade-space between cost, scheduled time and risk from its desired characteristics can be compared instantly.^[3] RiskAoA and variations of PRA are the only approved tools for United States Department of Defense Military Acquisition.

• Risk register – A project planning and organizational risk assessment tool. It is often referred to as a Risk Log.

• Systems Analysis Programs for Hands-on Integrated Reliability Evaluations (SAPHIRE) – A probabilistic risk and reliability assessment software tool.

See also

• ISO 31000
• Problematic Integration Theory: Current Usage

References