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Risk management tools allow planners to explicitly address uncertainty by identifying and generating metrics, parameterizing, prioritizing, and developing responses, and tracking risk. These activities may be difficult to track without tools and techniques, documentation and information systems.

There are two distinct types of risk tools: Two are identified by their approach, "Capital asset pricing model (CAP-M) and "Probabilistic risk assessment (PRA), is the mainstay of "project risk management. These are classified by the quality and fidelity of information required for their calculations. Market-Level tools use market forces to make risk decisions between securities. System-Level tools use project constraints to make risk decisions between projects. Component-Level tools use the "functions of probability and impact of individual risks to make decisions between resource allocations.


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Market-Level (CAP-M)[edit]

"CAP-M uses market or economic statistics and "assumptions to determine the appropriate required "rate of return of an "asset, given that asset's non-"diversifiable risk.

Component-Level (PRA)[edit]

These tools are applications of PRA and allow planners to explicitly address uncertainty by identifying and generating metrics, parameterizing, prioritizing, and developing responses, and tracking risk from components, tasks or costs. PRA, also called Likelihood-Consequence or Probability-Impact, is based upon single-point estimates of probability of occurrence, initiating event frequency, and recovery success (e.g., human intervention) of a specific consequence (e.g., cost or schedule delay).

Notable PRA tools and techniques

Importantly, "ISO/IEC 31010 (Risk assessment techniques) has a detailed but non-exhaustive list of tools and techniques available for assessing risk.

See also[edit]

References[edit]

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