Probabilistic risk assessment, and benefit analysis. Probabilistic risk assessment is a methodology to evaluate risks associated with a technology endevor.
Risk in a Probabilistic risk assessment (PRA) is defined as frequency of a hazard occuring from an activity or action.
In a Probabilistic risk assessment (PRA) , risk is characterized by two quantities:
- Severity: the magnitude of the possible adverse consequence.
- Probability: the likelihood of occurrence of a hazard.
Probabilistic risk assessment (PRA) answers the following three questions:
- What can go wrong with the studied technological in question, and what are the initiating events (undesirable starting events) that lead to the hazard (adverse consequences)?
- What and how severe are the hazards (potential detriments), or the exposure (adverse consequences) that the technological entity may be eventually subjected to as a result of the occurrence of the initiator?
- How likely to occur are these undesirable consequences, or what are their probabilities or frequencies?
| Hazard | Severity | Initiator | Probability | Exposure | |
|---|---|---|---|---|---|
| 1 | Project Time Overrun | Moderate | Lack of or incorrect Project Management | High | Software not released on time |
| 2 | Cost Overrun | Moderate | Hazard 1 | High | Costs Skyrocket |
| 3 | Crash Project - Additional Resources allocated. New team members are not properly trained | High | Hazard 1, after time overrun is identified new resources are allocated to project | High | Code base becomes higly unstable |
Additionally your full risk analysis should include a cost-benefit analysis, as well as opportunity costs (strategic), with a measurement of the risk of benefit shortfall.
Strategic Planning is a set of plans that take into account other players responses to events as a plan unfolds. This is different from a process plan that outlines in linear form the steps to achieve a goal.
