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STR N421 - Lecture 9 - 2011 - STR STR N421 Risk Risk...

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STR N421 Risk Management in Construction Industry Lecture 9 Dr. Maged Ezzat Georgy Topics Covered in Week 8 y Tools for quantitative risk analysis ( continued ). y Monte Carlo Simulation Monte Carlo Simulation. y Basic concepts and samples. y Steps of Monte Carlo simulation. y Software demonstration Software demonstration. Dr. Maged Ezzat Georgy
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Week 9 Topics to Cover in Week 9 y Risk response strategies. y Concept of risk tolerance. y Accepting risks; passive vs. active. y Avoiding risks. f y Risk transfer; insurance strategies. y Mitigating risks. y Concept of risk ownership. Dr. Maged Ezzat Georgy
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Risk Response Basics y Risk response is all about responding to the various risks in the project. y In what words, deciding what actions to take to handle the threats such risks could impose on the project. Dr. Maged Ezzat Georgy
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Basics y Response will be decided upon according to the degree of severity of the various risks. y For risks with sizable probabilities and/or impacts, you would be willing more to spend money and exert efforts in dealing with them. y While, for risks with limited probabilities and/or impacts, you would be less willing to do so. Dr. Maged Ezzat Georgy Risk Tolerance y Risk tolerance is … “A measure of the willingness of some person or A measure of the willingness of some person or some organization to accept or avoid risk”. y Acceptable risks vs. unacceptable risks. y Risk takers vs. risk avoiders. Dr. Maged Ezzat Georgy
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M A T R w Very Low I Low act rate X gh Imp Mode Hig ery igh Ve Hi Dr. Maged Ezzat Georgy Risk Response Strategies
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Strategies… y There are four known strategies to deal with project risks: Acceptance. A id Avoidance. Transfer. Mitigation. Dr. Maged Ezzat Georgy Risk Acceptance y Acceptance of a risk means: The severity of the risk is low enough (lower than our tolerance level) h that we will do nothing about the risk unless it occurs.
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