Decision tree

Revision as of 15:38, 20 September 2017

Abstract Decision Tree as a tool in Risk Management.

When the risks have been identified and the respective impacts and probabilities have been investigated, the decision whether to insure, mitigate, accept or externalise the risk in question will result in different possible outcomes with different probabilities and consequences. From these different branches other risk decisions will be made, and in the end a decision tree with all the possible different paths to what risks will be managed and how, will be established.

This wiki article investigates how the decision tree works as a tool in risk management, what the benefits are and what barriers are related to this tool.

1. The Decision Tree Concept

2. Applying the Decision Tree to Project Management

3. Other Risk Management Tools Involved

4. Benefits and Possibilites

5. Limitations and Barriers

6. Conclusion

7. References

8. Annotated Bibliography

Writer: Frederik Lind, s133570

Initial Steps to Decision Making

Risk Identification

The identification of risks is a process that must begin early in the project.

While it is downright impossible to identify all risks before they occur, it is however possible to map an extensive majority through a combination of a number of identification methods. Consider Both Threats and Opportunities ^[1]

Define Consequence and Likelihood Ranges

Figure 1. The probability/impact matrix. ^[2]

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The Decision Tree Concept

Figure 2. Decision/event tree for prior and posterior decision analysis.^[3]

Figure 3. Decision/event tree for pre-posterior decision analysis.^[3]

Applying the Decision Tree to Project Management

Other Risk Management Tools Involved

Benefits and Possibilites

Limitations and Barriers

Conclusion

References

1. ↑ Geraldi, Joana and Thuesen, Christian and Stingl, Verena and Oehmen, Josef (2017) How to DO Projects? A Nordic Flavour to Managing Projects: DS-handbook, Version 1.0, Publisher: Dansk Standard
2. ↑ Winch, Graham M. (2010) Managing Construction Projects - An Information Processing Approach, 2nd Edition, Publisher: John Wiley & Sons, Ltd.
3. ↑ ^{3.0 3.1} Faber, Michael Havbro (2010) Statistics and Probability Theory - In Pursuit of Engineering Decision Support, Publisher: Springer International Publishing AG.

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