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Project Management & Agile · Intermediate

Expected Monetary Value (EMV)

Statistical value calculated as probability multiplied by impact for a risk, summed across outcomes.

Definition

Threats have negative EMV and opportunities positive EMV. EMV is used in decision tree analysis and to size contingency reserves.

Example

A 30% chance of a $50k loss has EMV of -$15k.

Exam tip

Sum threat and opportunity EMVs with signs to get the net exposure.

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