Correlated Risk Models

As Risk Registers grow, so do the amounts of money required to manage all of the risk if they become realised. However, not all items in the register may happen independently of others.

Optimised Risk Funds

An example of a correlated risk could be the effect of weather and infrastructure / operational issues: transportation systems, both rail and highways suffer from such hazards. Freezing weather could not only lead to ice on roads or freezing rail points, but correlated with bad driving or failure of points heaters can lead to accidents and loss of service.

apm has supported the development and Monte Carlo simulation of correlated Risk Registers with a view to ensuring that correlations are rightly considered and that the degree of correlation is realistic.

We ensure that the monies set-aside in the client’s risk fund are optimised as far as is practicable, and in doing so provide a clear, more realistic view of risk to the client and the contracting Public body.