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Few thoughts. There is a bias in the descriptions above that risk outcome is all in the same direction and that direction is negative. Random risk outcomes are both plus and minus relative to baseline (risk is by definition relative to baseline so we are in command of whether our aggregate risk is +/-) The word "margin" has a well defined and different definition and common use to the use above while the use above is widely known as 'tolerance'. Thus a project quantity typically has tolerance in its allocation eg plus x% to minus y% both of which could be zero and it may have contingency also plus and or minus where contingency is for pre-identifiable causes - so its release is pre authorised in defined context and it may have reserve which is for un pre defined needs -so release requires explicit authorization for relocation from reserve to performance baseline. The bias is common: we should ask why? Answer: because empirically experience provides almost exclusively negative outcome examples. Since statistics in nature trend to normal distributions the question to answer is what additional factors are at play and improve them. Then tolerances are narrower - precision increases for a given level of accuracy or reliability - predictability improves, capital efficiency improves.
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Jul 7, 2019