Expected Loss
Posted: Wed Nov 23, 2022 7:37 pm
In RiskyProject Expected loss is calculated parameter. Could you please explain the calculating algorithm?
Expected cost of risk is calculated based on formula:
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(Mean cost of project - Original (deterministic) cost of project) * cost correlation coefficient of this risk
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It means that expected cost is this is a contribution of each risk to total cost increase of project. Interestingly that the mean cost of task, where this risk is assigned, is not in this formula directly. It is a correlation, which is used. The correlation coefficient is calculated based on total project cost and cost increase due to risk.