Emergency fund exists because some scenarios cannot be quantified
In project management, we always build up our budget, what we want to get from the sponsor in a certain way.
We need to justify for how much we actually need. For each work package (sub division of work), there are cost to it.
And then there are risks. There are usually 2 kinds of risks:
- Known risks: You go through a systematic qualitative and quantitative analysis to determined that
- Unknown risks: The shit. Things that, after putting a group of subject matter experts together, you still cannot anticipate everything
To a certain extent, risk management is similar to the way we do it, when evaluating risks while prospecting a business we invest in.
The known portion you can assigned a dollar value to the probability. The unknown is the difficult one.
A standard way is to assigned a ...
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