Adjusting the Predicted Aggregate Risks to Account for Unknown and Underappreciated Risks, Part 1: General Considerations, Cost, and Schedule

Allan S. Benjamin
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Allan S. Benjamin: Allan Benjamin Company

Chapter Chapter 5 in Integration of Project, Infrastructure, and Enterprise Risk Management, 2025, pp 49-58 from Springer

Abstract: Abstract The chapter provides guidance pertaining to the development of correlations for the adjustments needed to account for unknown and/or underappreciated (U/U) risk and for the uncertainty in each correlation. It does this by outlining the fundamentals of accounting for U/U risk as a contributor to the total aggregate risk; summarizing the principal leading indicators that have been found through many years of experience to correlate with the potential magnitude of the U/U risk; presenting correlations of historical data that provide insight into the potential contribution from U/U risk to the total aggregate cost of a program or project; and providing a helpful but nonprescriptive table of adjustments to the calculated cost of a program or project to account for U/U risk as a function of composite leading indicators.

Keywords: Unknown risk; Underappreciated risk; Leading indicators; Design-related indicators; Organization-related indicators; Work-environment-related indicators; Composite leading indicators; Cost correlations; James Webb Space Telescope; Nelson complexity index; Numerical guidelines (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:rischp:978-3-031-85070-7_5

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DOI: 10.1007/978-3-031-85070-7_5

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