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CHAPTER 6 Risk Analysis and Management
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Risk ID: 1-010-77
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Description: Specialized hardware may not be available. Mitigation strategy: Build simulator, accelerate hardware development. Risk trigger: Hardware falling 1 week or more behind schedule. Contingency plan: Outsource hardware development as backup, deliver system on simulator. Status/date/responsible person: Created Jan 1,01 Fred Jones Sim. completed Feb 10, 01 Bill Olson
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1. Why is risk management important 2. Consider driving to the airport to catch a plane on an airline that you have not used before. What risks might be unique to this trip to the airport, and which ones might be managed as part of the normal trip to the airport
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1. Analyze the potential risks for the dental o ce problem in 4, Problem 2. Classify the risks as normal or unique to this project. 2. Consider a project that has 0.5 percent probability of an undetected fault that would cost the company $100,000 in nes. Calculate the risk exposure.
CHAPTER 6 Risk Analysis and Management
3. Consider the use of an additional review for Problem 2 that would cost $100 but eliminate such a fault 50 percent of the time. Calculate this new risk exposure with using the additional review. Is the additional review approach better 4. What would change in Problem 3 if the additional review was only e ective 10 percent of the time 5. Build a decision tree for the problem in Example 6.3 if in Game A, the payo was $5.00 and if the cost of playing in Game B was $4.00. Should you play either game 6. Company X has historical data that shows a normal error rate of 0.0036 errors per KLOC. A study of a new review technique shows that it costs $1000 per 100 KLOC and decreases the number of errors by 50 percent. Assume that each error costs the company an average of $10,000. The current project is estimated to be 50 KLOC in size. Calculate risk exposure for each approach. Is the new review technique worth doing
Answers to Review Questions
1. Why is risk management important Risks can be managed and the e ect of risks can be minimized. However, minimizing risk requires that you identify and manage risks. 2. Consider driving to the airport to catch a plane on an airline that you have not used before. What risks might be unique to this trip to the airport, and which ones might be managed as part of the normal trip to the airport Normal risks Running out of gas, at tires, weather delays, tra c accidents, forgetting suitcases Unique risks Construction on highway to airport, possibly di erent terminal, checkin delays speci c to this airline
Solutions to Problems
1. Analyze the potential risks for the dental o ce problem in 4, Problem 2. Classify the risks as normal or unique to this project.
CHAPTER 6 Risk Analysis and Management
Normal risks Misunderstanding user desires, miscommunication with user, user hardware problems, cost overrun, project delays, and so on Unique risks Interfacing with patient record system 2. Consider a project that has 0.5 percent probability of an undetected fault that would cost the company $100,000 in nes. Calculate the risk exposure. The risk exposure is the sum of the risk exposure for each possibility. 0:005 100,000 0:995 0 $500 3. Consider the use of an additional review for Problem 2 that would cost $100 but eliminate such a fault 50 percent of the time. Calculate this new risk exposure with using the additional review. Is the additional review approach better 0:0025 100,100 0:9975 100 250:25 99:75 $350:00 The additional review approach is better. 4. What would change in Problem 3 if the additional review was only e ective 10 percent of the time The risk exposure would increase. 0:0045 100; 100 0:9955 100 450:45 99:55 550:00 and be marginally worse than the nonadditional review approach. 5. Build a decision tree for the problem in Example 6.3 if in Game A, the payo was $5.00 and if the cost of playing in Game B was $4.00. Should you play either game The risk decision tree is shown in Fig. 6-2. In both games you would expect to lose money. In game A you would lose an average of $0.75, and in Game B you would lose an average of $1.50.
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