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Project Risk and Cost Analysis by Deborah Singer Dobson, Michael S. Dobson

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 6 

Risk Cost Analysis

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Learning Objectives

By the end of this chapter, you will be able to:

•  Apply the fundamental risk formula of R = P × I to an actual risk situation.

•  Define risk cost analysis, contingency allowance and reserve, and risk premium.

•  Identify whether a given risk has a high or low degree of variation and apply the appropriate strategy in preparing to manage it.

•  Conduct a risk cost analysis and extrapolate the effect of different risk outcomes, using concepts of standard deviation, secondary risk, residual risk, and black swan events.

•  Apply exclusion, capping, and reinsurance as strategies for managing black ...

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