Risk Management Assignment Sample2

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Introduction

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Question 1

Introduction to the problem

This problem is about the PDC Company that is a government company. They are asked to develop and support the Oman Company. PDC is expected to maximize the financial return of the Oman Company. PDC gave two possible outcomes: first one is demand and second one is weak demand.

Decisions Tree without EMV

A decision tree is a type of flowchart that is used to visualize the decision making process through mapping the different course of action as well as their outcomes. Decision trees is usually three types 

• Root node: Here top nodes represent the objective or any type of big decisions that we are trying to make.
• Branches: Branch represents different options or any type of course of action. That is available to make the ultimate decisions. They are most commonly represented with the arrows, lines and assochiated costs.
• Left Node: It attracts the end of the branches and represents the possible outcomes of the actions. Here are two types of left nodes. The first one is the circle least node and the second one is the square left node. 

EMV with Decision Tree and Discussion

Expected monetary value is a balance of its probability and the impact over the range of the possibilities scenario. If there is a choice between two scenario this has decision is taken by the EMV that provide greater potential payoff 

We have chosen the D3 scenario because it has given the best and highest EMV value as compared to alternative ones. It is given the highest profit of 14.2 million profit margin that is good to have 

EVM helps in realistic project planning of the concern. It also helps in gaining the real time visualization of the data in the centralized manner. Also helps in measuring the budgets and accuracies during the life cycle of the project. It also helps in managing the risk of the concerns. It provides the transparency of the performance of the project, measuring the cost performance, physical process and also helps in identifying the potential issues.

Bayes Rule problem

Probability = P

Hard ware = H

Software = S

Other = O

Probability of hardware 

P (H) = 0.1

P (F/H) = 0.9

Probability of software 

P(S) =0.6

P (F/S) =0.2

Probability of Other 

P (O) =0.3

P (F/O) =0.5

P (B/F) = P(S) P (F/S)/P (H)*P (F/H) + P(S)*P (F/S) + P (O)*P (F/O) = 0.6 * 0.2/ 0.1*0.9 +0.6*0.2 +0.3*0.5= 0.12/0.36

= 0.33 

Bayes Rule outcomes and Discussion 

Bayes theorem is mainly used for calculation of probability. This probability is conditional where it is difficult to decide anything. Where it is difficult to come to any conclusion there Bayes theorems are used. This theorem is used in machine learning also. Here the probability is 0.33.

Question 2

• The profit is being increased in linear manner as well as the response varies. 3% of increaseness can make the profit by $7800 and this result can be treated as the increased profit that has been gained from the provided data. Each of the orders are having the revenue of $40 and the variable cost is being incurs. And from the elected envelop cost we are getting the 0.20 envelop cost. As well as the net gain is that is being calculated from the data is in between four to five percent.
• This can be found as the error and trial with the easy Excel goal seek tool. And if the response is calculated as about to six percent and that can be a good and better thread break even. And is the response is being more than six percent for that case the company can make some monkey to be a great business making approach. 
• Another point that is being find out that, if the rate of 3% is being proceed with mailing so from the provided table it can be founded that if the apparent answer is no then the profit is negative and if the it can be looked up in the long term impacts of the taken decision, for that case the answer will definitely be yes, that actually means the profit is being done in a proper way and the result is positive. And if the owners are explicitly taking the long term in the model and some more complex need to be done.
• Whenever there is being high degree of uncertainty of the input model it actually make the little sense of the profit level and the rate of breakdown response. This actually makes the sense of probability to that particular profit and having the certain value to the probable company of the breakdown approach. 

• b) Maximum value is at the point c (25, 20)
  Total profit is = 1600$
• c) At the point the material is unused, 1 ton is leftover there as unused material y=20, so 20/5 is 4 tons have been used and 1 ton is left.
• d) There is not any construction redundant in the question.

Question 3 

Exposure of risk is the regularity of potential time ahead loss ensue from a particular event or activity. Basically risk exposure is used for any business frequently risking ranks according to their probability of happen multiplied by chance loss if they may do. By ranking the prospect of these possible losses, an organization or business can control the small losses and may be notable sufficient to authorize investment. 

Question 4

• a) Risk assessment is mainly subdued in the identification and analyzing the future events that will impact the organization. It measures how short the risk is and that how much our organization effected by it. Risk assessment helps in estimating the how much the risk tolerance the company have if there will be any certainty of occurring risk. Organization conduct many risk assessment in many areas of the business there are mainly two types of risk assessment. First one is Quantitative risk assessment and second one is qualitative risk assessment. In this prepare the both type of risk assessment has been used. Quantitative risk assessment focuses on the performance of a quantity of the measurable data in assessing the risk and its quantity. In performing the quantity risk assessment the management should prepare list of the possible risk in our most digital assets. In the second there will be valuable information like infrastructure of the IT and key assets. Then looking at your risk of list and analyzing the most top list of the risk is to be identified by the managements. Qualitative risk assessment is about what would actually happened and in day to day manner. It is straight forward risk assessments and it is also a number based risk assessment. In this question the company has used both type of risk assessment in identifying the risk of the concerned that has been occur and what will be risking in the future risk prospective. 
• b) Project sensitivity is about the how purely the evaluation of data through the driven data forecasting. It identifies the risk and also identifies the impact weather it is high or low ones.

Some common risk are

• Estimation of the risks and time
• Requirement of change
• Unusual circumstances
• Unclear specification 
• Design of negotiation
• Risk in technical
  
  c) The risk can be prevented by applying the various methods like

• Identification of risk
• Keep in the clients touch
• Never miss good opportunities
• Prioritizing the risk
• Making a risk responding plan
• Keeping track of every risk

References

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