The cost impact of a risk is the effect on the program cost should the risk occur. The cost impact should not consider the probability of the risk occurring. Often, risk dependencies need to be taken into account when assessing the cost impact, and care should be taken to avoid entering the impact of the same group of co-dependent risks in duplicate.

The difference between a purely qualitative risk management approach - where risks are recorded in words on a register, and a quantitive approach - is the input of a numerical cost impact and a % chance of occurrence. While the cost impact and probability of occurrence are always guesses, studies show that more accurate results come from attempting to evaluate risks quantitatively.

The easiest way to input the cost impact for a risk is to click on the ASSESSMENT tab and click on the Cost Impact cell below the title (highlighted above with purple box and #8) to enter a best-guess cost impact. You can modify the currency by carefully clicking the mouse not over the number, but right on top of the currency symbol. You will be presented with a list of global currencies for you to select the right one (as shown below).

• Changing the currency of a risk after it has been assessed or even responded to is not recommended because the response and mitigation task currencies will adjust to the new currency, and you then have to go through the response tab especially the mitigation plan to make sure that all the figures are still reasonable and correct.

Benchmarking is recommended whenever a cost impact is being directly assessed. Looking for similar risks on previous proposals or programs and comparing their cost impact is an excellent way to validate your own thinking, as well as checking the cost impacts derived previously.

After your enter the cost impact, click on the speech bubble in the right side of the cost impact to enter an explanation in the popup. This can be viewed later on, via the same speech bubble.

It is possible to have the system determine the cost impact by entering a resource plan to represent the cost impact.

1. Click on the link (shown in the screen shot above with #1) "Enter a resource plan to calculate the cost impact"
2. Click on "click here to add rows" or on the + to add a new resource or resources (see bubble #2 below)
3. Enter (to search) or select the resource(s) which will be impacted should the risk occur
4. The start and finish dates, plus the duration, inherit from the WBS this risk is assigned to. Duration is always calculated as the number of working dates from start to end date. Edit any of these fields as needed
5. You can either enter the effort directly (and the system will compute the average number of people) or enter the number of full-time equivalents or FTE and have the system calculate the effort, as FTE multiplied by duration
6. The hourly rate for each resource comes from SAP. The total cost for each resource is calculated as the rate/hr times the effort over the duration of that task, in hours
7. The total cost for all resources is added up and displayed above the table, as is the total effort in hours. If any resource rates/hr are in a different currencies to the main currency used in this risk, exchange rate conversions are automatically triggered
8. Finally the total cost is transfered back to the risk's assessed cost impact (shown above). The cost impact is still editable.

You should edit the transferred cost impact in #8 above to account for costs such as material, travel or other direct costs.

However the cost impact is input into the cell, when you enter/view the cost impact it is colored according to the severity of that cost on the cost impact scale assigned to your risk policy.

Schedule impact is the impact to the program delivery schedule, in days, should the risk occur. It is entered into the schedule impact box as highlighted in the screen image below. You can enter the impact in days (e.g. 45 or 45d), hours (e.g. 360h) or weeks (e.g. 9 weeks or 9w). Like cost impact, the schedule impact cell is automatically colored based on its severity in your risk policy, as a visual check.

If the schedule impact affects the critical path of the program, check the box above highlighted by the purple arrow. It is for informational purposes only. Entering the schedule impact is optional.

The technical performance impact assesses how the risk, should it occur, changes the ability of the program to meet its technical performance goals. To enter the performance impact select the best-fit case from the list. It is also optional.

The overall impact for your risk defaults to the "worst-case" of the cost, schedule or performance impact according to their scores. If for example the schedule impact was critical (red colored) and the cost and performance impacts were minor (green colored) then the overall impact will be critical.

1. The overall impact is determined for you based on worst-case cost, schedule or performance. Depending on your risk policy you might be permitted to click on the overall impact box and select a new value with an explanation of the change. Whether you can edit the overall impact or not be sure to check "Impact reviewed or update" box above
2. The risk is plotted on the heatmap per your risk policy, according to the probability of occurrence (for the row) vs. the overall impact severity (for the column)
3. The weighted cost impact is calculated as probability times cost impact, with some variations.