Solution

What is Risk?

Potential uncertain event that, if occurs, negatively affects project objectives (cost, schedule, quality) - Boehm. Types: Project (staff, budget), Technical (tech failure), Business (market).

Why Analysis is Done?

Risk Analysis = Assess $Probability × Impact$ (Exposure). Purposes:

1. Prioritize - Focus on high-exposure risks first (Pareto)
2. Estimates contingency - Buffer time/budget
3. Mitigation planning - Decide Avoid/Transfer/Reduce/Accept
4. Monitoring - Triggers and tracking
5. Decision making - Go/no-go, prototype vs full build

Without analysis, management is reactive → cost/schedule overrun. With analysis, proactive, reduces failure chance by 30-50%.

Example: $P=0.6, Impact= High (5) → RE=3.0$ gets mitigation budget before $P=0.2, Impact=2$.