Monte Carlo Simulation of Risk - Revision history

Tkokotas at 11:57, 20 December 2018

2018-12-20T11:57:40Z

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			''Developed by Ebou Touray''


	== Abstract ==		== Abstract ==

Tkokotas at 20:16, 23 October 2018

2018-10-23T20:16:53Z

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	There are several ways in which risk assessments can be conducted. This article provides a profound description of how to conduct a quantitative risk assessment by means of utilizing Monte Carlo simulations.		There are several ways in which risk assessments can be conducted. This article provides a profound description of how to conduct a quantitative risk assessment by means of utilizing Monte Carlo simulations.

	[[Category:Risk Management]]		[[Category:Risk Management]][[Category:Risk]]


	== Risk ==		== Risk ==

Tkokotas at 18:53, 23 October 2018

2018-10-23T18:53:26Z

← Older revision		Revision as of 18:53, 23 October 2018
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	There are several ways in which risk assessments can be conducted. This article provides a profound description of how to conduct a quantitative risk assessment by means of utilizing Monte Carlo simulations.		There are several ways in which risk assessments can be conducted. This article provides a profound description of how to conduct a quantitative risk assessment by means of utilizing Monte Carlo simulations.

	[[Category:~~''Project, Quantitative risk analysis, Monte Carlo Simulation''~~]]		[[Category:Risk Management]]

	== Risk ==		== Risk ==

$Young-Money$: /* Risk Management */

2014-12-02T20:44:45Z

Risk Management

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	*'''Phase 4:Risk Monitoring and Control ''':		*'''Phase 4:Risk Monitoring and Control ''':
	This phase involves the continuous monitoring, supervising and controlling of the different identified risks <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> . New risks that were not initially identified could also surface along a projects lifecycle, thus the necessity of continuously reassessing and revaluating risks. Figure 4 depicts a more detailed process of Risk management.		This phase involves the continuous monitoring, supervising and controlling of the different identified risks <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> . New risks that were not initially identified could also surface along a projects lifecycle, thus the necessity of continuously reassessing and revaluating risks. Figure 4 depicts a more detailed process of Risk management.
	[[File:Risk analysis.png\|400px\|thumb\|center\|Figure 4: Different processes pertained in the four phases of risk management<ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>		[[File:Risk analysis.png\|400px\|thumb\|center\|Figure 4: Different processes pertained to the four phases of risk management<ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>
	]].		]].

$Young-Money$: /* Risk Management */

2014-12-02T20:43:16Z

Risk Management

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	According to ISO 31000 <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management is the coordination of activities to direct and control an organization with regards to risk. In literature<ref name=''Nemuth''> ''Nemuth, Dr.-Ing. Tilo,Practical Use of Monte Carlo Simulation for Risk Management within the International Construction Industry,6th International Probabilistic Workshop 2008'' </ref> <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management can be decomposed into four continuous phases i.e. risk - Identification, Analysis, Evaluation and Monitoring as depicted on Figure 2 and elaborated below. Before embarking on a risk management course, it is crucial to commence with a risk management plan. Risk management planning is the structuring and detailing of how the risk management process is going to be conducted throughout the lifecycle of a project <ref name=''Tysiak''> ''Tysiak, Wolfgang; Sereseanu, Alexander,International Journal of Computing 2010'' </ref>. Subjects such as methodology, practices, roles and responsibilities, sequence and timing of activities are pertained to risk management planning <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>.		According to ISO 31000 <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management is the coordination of activities to direct and control an organization with regards to risk. In literature<ref name=''Nemuth''> ''Nemuth, Dr.-Ing. Tilo,Practical Use of Monte Carlo Simulation for Risk Management within the International Construction Industry,6th International Probabilistic Workshop 2008'' </ref> <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management can be decomposed into four continuous phases i.e. risk - Identification, Analysis, Evaluation and Monitoring as depicted in Figure 2 and elaborated below. Before embarking on a risk management course, it is crucial to commence with a risk management plan. Risk management planning is the structuring and detailing of how the risk management process is going to be conducted throughout the lifecycle of a project <ref name=''Tysiak''> ''Tysiak, Wolfgang; Sereseanu, Alexander,International Journal of Computing 2010'' </ref>. Subjects such as methodology, practices, roles and responsibilities, sequence and timing of activities are pertained to risk management planning <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>.

$Young-Money$: /* Risk Management */

2014-12-02T20:40:21Z

Risk Management

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	According to ISO 31000 <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management is the coordination of activities to direct and control an organization with regards to risk. In literature<ref name=''Nemuth''> ''Nemuth, Dr.-Ing. Tilo,Practical Use of Monte Carlo Simulation for Risk Management within the International Construction Industry,6th International Probabilistic Workshop 2008'' </ref> <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management can be decomposed into four continuous phases i.e. risk - Identification, Analysis, Evaluation and Monitoring as depicted in Figure 2 and elaborated below. Before embarking on a risk management course, it is crucial to commence with a risk management plan. Risk management planning is the structuring and detailing of how the risk management process is going to be conducted throughout the lifecycle of a project <ref name=''Tysiak''> ''Tysiak, Wolfgang; Sereseanu, Alexander,International Journal of Computing 2010'' </ref>. Subjects such as methodology, practices, roles and responsibilities, sequence and timing of activities are pertained to risk management planning <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>.		According to ISO 31000 <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management is the coordination of activities to direct and control an organization with regards to risk. In literature<ref name=''Nemuth''> ''Nemuth, Dr.-Ing. Tilo,Practical Use of Monte Carlo Simulation for Risk Management within the International Construction Industry,6th International Probabilistic Workshop 2008'' </ref> <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management can be decomposed into four continuous phases i.e. risk - Identification, Analysis, Evaluation and Monitoring as depicted on Figure 2 and elaborated below. Before embarking on a risk management course, it is crucial to commence with a risk management plan. Risk management planning is the structuring and detailing of how the risk management process is going to be conducted throughout the lifecycle of a project <ref name=''Tysiak''> ''Tysiak, Wolfgang; Sereseanu, Alexander,International Journal of Computing 2010'' </ref>. Subjects such as methodology, practices, roles and responsibilities, sequence and timing of activities are pertained to risk management planning <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>.

$Young-Money$: /* Risk Management */

2014-12-02T20:39:14Z

Risk Management

← Older revision		Revision as of 20:39, 2 December 2014
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	According to ISO 31000 <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management is the coordination of activities to direct and control an organization with regards to risk. In literature<ref name=''Nemuth''> ''Nemuth, Dr.-Ing. Tilo,Practical Use of Monte Carlo Simulation for Risk Management within the International Construction Industry,6th International Probabilistic Workshop 2008'' </ref> <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management can be decomposed into four continuous phases i.e. risk - Identification, Analysis, Evaluation and Monitoring as depicted in Figure 2 and elaborated below. Before embarking on a risk management course, it is crucial to commence with a risk management plan. Risk management planning is the structuring and detailing of how the risk management process is going to be conducted throughout the lifecycle of a project <ref name=''Tysiak''> ''Tysiak, Wolfgang; Sereseanu, Alexander,International Journal of Computing 2010'' </ref>. Subjects such as methodology, practices, roles and responsibilities, sequence and timing of activities are pertained to risk management planning <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>.		According to ISO 31000 <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management is the coordination of activities to direct and control an organization with regards to risk. In literature<ref name=''Nemuth''> ''Nemuth, Dr.-Ing. Tilo,Practical Use of Monte Carlo Simulation for Risk Management within the International Construction Industry,6th International Probabilistic Workshop 2008'' </ref> <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref> risk management can be decomposed into four continuous phases i.e. risk - Identification, Analysis, Evaluation and Monitoring as depicted in Figure 2 and elaborated below. Before embarking on a risk management course, it is crucial to commence with a risk management plan. Risk management planning is the structuring and detailing of how the risk management process is going to be conducted throughout the lifecycle of a project <ref name=''Tysiak''> ''Tysiak, Wolfgang; Sereseanu, Alexander,International Journal of Computing 2010'' </ref>. Subjects such as methodology, practices, roles and responsibilities, sequence and timing of activities are pertained to risk management planning <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>.


	*'''Phase 1: Risk Identification ''':		*'''Phase 1: Risk Identification ''':

$Young-Money$: /* Risk Management */

2014-12-02T20:35:30Z

Risk Management

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	*'''Phase 3:Risk Evaluation''':		*'''Phase 3: Risk Evaluation''':
	This phase involves the evaluation of the different risks by means of comparison in terms of severities and frequencies thus the establishment of tolerability levels. Organizations can in this phase chose to accept, try to avoid, transfer the risks or terminate the project if the risks are too high.		This phase involves the evaluation of the different risks by means of comparison in terms of severities and frequencies thus the establishment of tolerability levels. Organizations can in this phase chose to accept, try to avoid, transfer the risks or terminate the project if the risks are too high.

$Young-Money$: /* Risk Management */

2014-12-02T20:35:17Z

Risk Management

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	*'''Phase 3: Evaluation''':		*'''Phase 3:Risk Evaluation''':
	This phase involves the evaluation of the different risks by means of comparison in terms of severities and frequencies thus the establishment of tolerability levels. Organizations can in this phase chose to accept, try to avoid, transfer the risks or terminate the project if the risks are too high.		This phase involves the evaluation of the different risks by means of comparison in terms of severities and frequencies thus the establishment of tolerability levels. Organizations can in this phase chose to accept, try to avoid, transfer the risks or terminate the project if the risks are too high.

$Young-Money$: /* Risk Management */

2014-12-02T20:34:50Z

Risk Management

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	[[File:Risk matrix.png\|300px\|thumb\|right\|Figure 3:Risk Matrix for prioritizing risks bases on frequency and consequences in monetary terms]]		[[File:Risk matrix.png\|300px\|thumb\|right\|Figure 3:Risk Matrix for prioritizing risks bases on frequency and consequences in monetary terms]]
	*'''Phase 2: ~~Evaluation~~''':		*'''Phase 2: Risk Analysis''':
	This phase involves the comprehension of the nature of the initially identified risks and an estimation of their consequences <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>, since risk have different severity degrees. Risk analysis can be sub divided into qualitative and quantitative risk analysis. Both approaches can be utilized in one project but in order to conduct a quantitative analysis, estimates from the qualitative analysis is needed. On the other hand risk analysts can chose to stop with a qualitative risk analysis if the project is not too big.		This phase involves the comprehension of the nature of the initially identified risks and an estimation of their consequences <ref name=''Danish Standards''> ''Danish Standards,ISO 31000 Risk management - Principles and guidelines 2009'' </ref>, since risk have different severity degrees. Risk analysis can be sub divided into qualitative and quantitative risk analysis. Both approaches can be utilized in one project but in order to conduct a quantitative analysis, estimates from the qualitative analysis is needed. On the other hand risk analysts can chose to stop with a qualitative risk analysis if the project is not too big.