Free PM calculator · Risk
Risk EMV Calculator
List your risks with their probability and cost impact. The calculator gives the expected monetary value (EMV) of each one, the total for threats and opportunities, and a suggested contingency reserve.
| Risk | Type | Probability % | Impact ($) | EMV |
|---|
What is expected monetary value?
Expected monetary value (EMV) puts a dollar figure on uncertainty. For each risk, multiply the probability that it happens by its financial impact. Threats have a negative EMV and opportunities a positive one. Adding them gives the overall risk exposure of the project, a common basis for the contingency reserve.
Net EMV = Σ opportunity EMVs − Σ threat EMVs
Worked example
A 70% chance that a supplier delays delivery, costing $150,000, has an EMV of −$105,000. A 20% chance of a $20,000 saving from a new software release has an EMV of +$4,000. The net exposure is −$101,000, so a contingency reserve of about $101,000 covers the expected cost of these risks.
Good practice
- Use EMV for individual risks you have identified (known unknowns). Unknown unknowns are covered by the management reserve.
- Review probabilities and impacts regularly, and close risks that have passed.
- EMV is an average. A single large threat can still hit in full, so plan responses for high-impact risks even if their EMV is small.
Related: EMV, contingency reserve, decision tree, risk response strategies.