5 Factored Value Technique for Risks and Opportunities

In some organisations they take a ‘swings and roundabouts’ approach to Risk Contingency … that everything will work itself out on average. A technique in popular use is that of the ‘Factored Value’ or ‘Expected Value’, in which we simply multiply the ‘central value’ of the Risk variables’ 3-point range by the corresponding Probability of Occurrence. This includes Baseline Uncertainty with a probability of 100%. However, the popularity of a technique is probably more of an indicator of its simplicity than its appropriateness.

Depending on what the ‘central value’ represents, there are two ways we can do this … the ‘wrong way’, and the ‘slightly better way’. (Did you notice that I didn’t say ...

Get Risk, Opportunity, Uncertainty and Other Random Models now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.