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11 - PROJECT RISK MANAGEMENT

risk from the top has an expected monetary value of 0.5 × $8000 or $4000. Therefore, when it comes to selecting
requirements (features) for an upcoming iteration, the risk mitigation action associated with risk #2 ranks similar
to the functional requirements value for risk #2. In other words, this risk mitigation work is of equal value to the
organization as the addition of a new software feature.

11.4.2.2 Quantitative Risk Analysis and Modeling Techniques

See Section 11.4.2.2 of the PMBOK Guide.
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The following consideration also applies. Quantitative simulations may identify the need for more extensive
risk mitigation, and for applying schedule and budget contingency reserves. Monte Carlo simulations can be used
to compute project outcomes at various levels of probability and to indicate the probability of obtaining the “most
likely” estimate (see Figures 11-14 and 11-18 of the PMBOK Guide).
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11.4.2.3 Expert Judgment

See Section 11.4.2.3 of the PMBOK Guide. See also Section 11.3.2.6 of this Software Extension.
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11.4.3 Perform Quantitative Risk Analysis: Outputs

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The output in Section 11.4.3 of the PMBOK Guide for performing quantitative risk analysis is an applicable
output from performing quantitative risk analysis for software projects.

11.4.3.1 Project Documents Updates

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See Section 11.4.3.1 of the PMBOK Guide.

11.5 Plan Risk Responses

The inputs, tools and techniques, and outputs for planning risk responses in Section 11.5 of the PMBOK Guide
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are applicable to planning risk responses for software projects, with the following extensions.

Planning risk responses for software projects includes evaluating risk treatment alternatives and selecting them.
A project manager can evaluate the risk exposure of an untreated risk, the exposure after treatment (the residual risk),
and the cost of the risk treatment. When the cost of the risk treatment is high compared to the impact of the risk, accepting
the risk may be the best response. Accepted risks remain on a watch list or in a risk register for ongoing monitoring.

11.5.1 Plan Risk Responses: Inputs

The inputs for planning risk responses in Section 11.5.1 of the PMBOK Guide are applicable to planning risk
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responses for software projects.

206 ©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition
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