Risk Profiles

I've received a new tool today - @Risk for Project. This tool replaces the previous tool - Risk+ which comes with winSight - an Earned Value management database that collects EV data from a variety of sources, including Project Server. @Risk for Project is a tool that provides Monte Carlo simulation analysis of MSFT Project schedules. It has a large number of features useful for our program.

The point is not the new tool - which is very nice and makes my job of assessing the programmatic risk much easier - it is the diagrams on page 33 of the manual. (You can download a full function copy of @Risk with the documentation for a 10 day trial). The pictures here show two probability distribution, one with higher risk than the other. The probability distribution F represents greater risk than E because the range is larger and the probability of occurrence is more spread out then E.

The second set of pictures on page 32 are. Probability distribution A represents a greater risk than B despite identical shapes because the range of A includes less desirable results - the spread relative to the mean is greater in A than in B.

Now let's look at the Thomsett probability distributions.

In the Low Risk Profile the variance from the mean is larger than in the High Risk Profile. This would indicate that there is "MORE" risk in the top probability distribution than in the bottom one.

In the risk management parlance - The Risk is in the Right Skewed Tails