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Abstract

It is a rare program that is affected by just a single risk. There may be one risk that is of more concern than others, but there are almost always other risks that can compound the challenges and impacts of any single risk. If not foreseen and mitigated, compounding risk impacts can be a dangerous phenomenon. Our findings show that the program impact of a single risk can be significantly greater—by 20–30% or more—when it occurs in the presence of certain other risks.

The authors have developed an approach using system dynamics simulation to assess the impact of both isolated risks and the combined impact of risks. The model employed simulates the primary cost drivers of most programs— staffing, work schedules, the drivers of productivity, and the causes of rework.

This paper focuses on the dynamics that can cause compounding impacts in combinations of potentially interacting risks.

Keywords

System dynamics simulation risk analysis program management compounding risk impact

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