Risk management - Evaluate - conditional correlation

The Risk Management process

We have previously looked at independent activities [see The Risk Management process - Evaluate - independent correlation] where there is no correlation between the events. We have also looked at full positive [see The Risk Management process - Evaluate - positive correlation] and full negative [see The Risk Management process - Evaluate - negative correlation] correlations. We could also examine a situation where the values of ‘B’ are conditional on the value of ‘A’ and assign these appropriate values and probabilities. These are shown below for ‘B’ conditional on ‘A’.

Delay 'A‘	Probability	Delay 'B‘	Probability
7	0.3	7	0.4
		9	0.6
9	0.5	7	0.3
		9	0.6
		11	0.2
11	0.2	9	0.7
		11	0.3

The calculation for the combination of ‘A’ and ‘B’ is below:

The Cumulative probability curve for this is shown next [see Cumulative probability graph].