Quantitative Risk Analysis

Quantitative Risk Analysis

1. Main Technique

   • Decision Tree analysis
   • Simulation
   • Sensitivity analysis

2. Decision Tree analysis

   • help select best course of action in situations that future are uncertaij
   • help find estimated monetary value(EMV)

3. Simulation

   • to analyze expected behavior/performance of system
   • Monte Carlo analysis
     • must have three estimates
     • estimate of the likelihood of the estimate being between the most likely and optimistic values
     • Steps
     • Example

4. Sensitivity analysis

   • to show effects of changing one/more variables on an outcome
   • Common tools
     • Spreadsheet software
   • Example

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