No risk exists alone, it is the uncertainty of an unfavorable outcome that creates risk
Aleatory Uncertainty produces Aleatory Risk. Epistemic Uncertainty produces Epistemic Risk. Iin both cases it is the UNCERTAINTY that is the source of the Risk. Risks do not exist with the uncertainty first.
- Uncertainty creates risk
- Reducing the uncertainty may reduce risk
- There are two dimensions to uncertainty
- One that can be reduced
- One that can not be reduced
Eight Steps To Building a Risk Informed Integrated Master Schedule
0. Assemble a credible Work Breakdown Structure. Along with that a credible WBS Dictionary
1. Assess the aleatory risks in the WBS and the IMS. Determine what the variances will be for the work efforts of the activities.
2. Adjust the activity durations and sequence to create th needed schedule (and cost) margin to handle the aleatory risk
3. Assign the schedule and cost margins to protect the end item deliverables
4. Identify the Event Based (Epistemic) risk from the WBS Dictionary
5. Assign these risk to the Risk Register
6. Develop risk handling plans for each of these risks.
7. Determine the cost and schedule impacts for each of these Epistemic risk. Create management Reserve for the risk that have not mitigation strategies. Assign work for mitigating the risks in the IMS, budget that work, and measure the performance of the work in reducing the risk as planned
8. Assemble the aleatory and epistemic uncertainties, the cost of mitigation for the epistemic risks, and the Management Reserve, cost and schedule margin, along with all the planned work, to see if it all fits within the Total Allocated Budget (TAB)