ABSTRACT
Connecting risk parameters to process, project, and business parameters adds significant value to risk management. The mental models are augmented by formal risk models, making risk management a productive and fruitful exercise. Many risk models are built around one theme: variation is a source of risk. The risk model eventually becomes a model of variation. Risk models help immediately in risk identification, as well as risk quantifi-cation. Risk resembles a cloud: shapeless, inconsistent, and volatile. Models bring visibility to risks, connect risk elements, and create a structure. A new risk profile is created for the product, with a corresponding series of tests that reduce risk by uncovering hidden risks. The same risk profile may inspire the redesigning of certain components. Many risk models are built around one theme: variation is a source of risk. The risk model eventually becomes a model of variation.
