Enterprise Risk Aggregator
Overview
Aggregate individual project risks into a portfolio-level view. Identify correlated risks across projects, calculate enterprise risk exposure, and develop portfolio-wide mitigation strategies.
Risk Aggregation Framework
┌─────────────────────────────────────────────────────────────────┐ │ ENTERPRISE RISK AGGREGATION │ ├─────────────────────────────────────────────────────────────────┤ │ │ │ PROJECT RISKS CORRELATION PORTFOLIO VIEW │ │ ───────────── ─────────── ────────────── │ │ │ │ Project A: Market risks ←→ Total Exposure: │ │ • Material cost ↗ affect all $45M │ │ • Labor shortage projects ─────────────── │ │ ↓ Risk Categories:│ │ Project B: Weather impacts • Market: 35% │ │ • Weather delay multiple sites • Schedule: 25% │ │ • Permit issue ↓ • Safety: 15% │ │ Supply chain • Regulatory:15%│ │ Project C: affects • Technical:10% │ │ • Subcontractor ↗ entire region ─────────────── │ │ • Design change Top 5 Risks: │ │ 1. Steel prices │ │ 2. Labor market │ │ 3. Supply chain │ │ │ └─────────────────────────────────────────────────────────────────┘
Technical Implementation
from dataclasses import dataclass, field from typing import List, Dict, Optional, Tuple, Set from datetime import datetime, timedelta from enum import Enum import statistics import math
class RiskCategory(Enum): MARKET = "market" SCHEDULE = "schedule" SAFETY = "safety" REGULATORY = "regulatory" TECHNICAL = "technical" FINANCIAL = "financial" ENVIRONMENTAL = "environmental" SUPPLY_CHAIN = "supply_chain" LABOR = "labor" WEATHER = "weather"
class RiskLevel(Enum): LOW = 1 MEDIUM = 2 HIGH = 3 CRITICAL = 4
class CorrelationType(Enum): POSITIVE = "positive" # Risks tend to occur together NEGATIVE = "negative" # One risk may offset another INDEPENDENT = "independent"
@dataclass class ProjectRisk: id: str project_id: str project_name: str category: RiskCategory description: str probability: float # 0-1 impact: float # Dollar amount score: float = 0.0 # P x I level: RiskLevel = RiskLevel.MEDIUM status: str = "open" mitigation: str = "" triggers: List[str] = field(default_factory=list)
def __post_init__(self):
self.score = self.probability * self.impact
if self.score > 5000000:
self.level = RiskLevel.CRITICAL
elif self.score > 1000000:
self.level = RiskLevel.HIGH
elif self.score > 250000:
self.level = RiskLevel.MEDIUM
else:
self.level = RiskLevel.LOW
@dataclass class RiskCorrelation: risk1_id: str risk2_id: str correlation_type: CorrelationType strength: float # 0-1 shared_triggers: List[str] notes: str = ""
@dataclass class AggregatedRisk: category: RiskCategory total_exposure: float expected_loss: float worst_case: float risk_count: int projects_affected: int mitigation_cost: float residual_exposure: float
@dataclass class PortfolioRiskProfile: report_date: datetime total_projects: int total_risks: int total_exposure: float expected_loss: float var_95: float # Value at Risk at 95% confidence by_category: Dict[str, AggregatedRisk] top_risks: List[ProjectRisk] correlations: List[RiskCorrelation] systemic_risks: List[str]
class EnterpriseRiskAggregator: """Aggregate risks across project portfolio."""
# Common triggers that create correlation
SYSTEMIC_TRIGGERS = [
"steel_price_increase",
"labor_shortage",
"supply_chain_disruption",
"interest_rate_change",
"regulatory_change",
"weather_event",
"economic_downturn",
"pandemic",
"trade_restrictions"
]
def __init__(self, portfolio_name: str):
self.portfolio_name = portfolio_name
self.risks: Dict[str, ProjectRisk] = {}
self.correlations: List[RiskCorrelation] = []
self.projects: Set[str] = set()
def add_risk(self, project_id: str, project_name: str,
category: RiskCategory, description: str,
probability: float, impact: float,
triggers: List[str] = None,
mitigation: str = "") -> ProjectRisk:
"""Add project risk to portfolio."""
risk_id = f"RISK-{project_id}-{len(self.risks)+1:04d}"
risk = ProjectRisk(
id=risk_id,
project_id=project_id,
project_name=project_name,
category=category,
description=description,
probability=probability,
impact=impact,
triggers=triggers or [],
mitigation=mitigation
)
self.risks[risk_id] = risk
self.projects.add(project_id)
return risk
def import_project_risks(self, project_id: str, project_name: str,
risks: List[Dict]) -> int:
"""Import risks from project risk register."""
count = 0
for r in risks:
self.add_risk(
project_id=project_id,
project_name=project_name,
category=RiskCategory(r['category']),
description=r['description'],
probability=r['probability'],
impact=r['impact'],
triggers=r.get('triggers', []),
mitigation=r.get('mitigation', '')
)
count += 1
return count
def detect_correlations(self) -> List[RiskCorrelation]:
"""Automatically detect correlated risks."""
self.correlations = []
risks = list(self.risks.values())
for i, risk1 in enumerate(risks):
for risk2 in risks[i+1:]:
# Check for shared triggers
shared = set(risk1.triggers) & set(risk2.triggers)
if shared:
# Calculate correlation strength
total_triggers = len(set(risk1.triggers) | set(risk2.triggers))
strength = len(shared) / total_triggers if total_triggers > 0 else 0
correlation = RiskCorrelation(
risk1_id=risk1.id,
risk2_id=risk2.id,
correlation_type=CorrelationType.POSITIVE,
strength=strength,
shared_triggers=list(shared)
)
self.correlations.append(correlation)
# Check for same category across projects
elif (risk1.category == risk2.category and
risk1.project_id != risk2.project_id):
correlation = RiskCorrelation(
risk1_id=risk1.id,
risk2_id=risk2.id,
correlation_type=CorrelationType.POSITIVE,
strength=0.3, # Weak assumed correlation
shared_triggers=[],
notes=f"Same category: {risk1.category.value}"
)
self.correlations.append(correlation)
return self.correlations
def identify_systemic_risks(self) -> List[Dict]:
"""Identify systemic risks affecting multiple projects."""
systemic = []
# Count triggers across all risks
trigger_count: Dict[str, Set[str]] = {}
for risk in self.risks.values():
for trigger in risk.triggers:
if trigger not in trigger_count:
trigger_count[trigger] = set()
trigger_count[trigger].add(risk.project_id)
# Systemic if affects multiple projects
for trigger, projects in trigger_count.items():
if len(projects) > 1:
# Calculate total exposure
affected_risks = [r for r in self.risks.values()
if trigger in r.triggers]
total_exposure = sum(r.score for r in affected_risks)
systemic.append({
"trigger": trigger,
"projects_affected": len(projects),
"risks_affected": len(affected_risks),
"total_exposure": total_exposure,
"is_systemic": trigger in self.SYSTEMIC_TRIGGERS
})
return sorted(systemic, key=lambda x: -x['total_exposure'])
def aggregate_by_category(self) -> Dict[RiskCategory, AggregatedRisk]:
"""Aggregate risks by category."""
by_category = {}
for category in RiskCategory:
cat_risks = [r for r in self.risks.values() if r.category == category]
if not cat_risks:
continue
projects = set(r.project_id for r in cat_risks)
# Simple aggregation (no correlation adjustment)
total_exposure = sum(r.impact for r in cat_risks)
expected_loss = sum(r.score for r in cat_risks)
# Worst case assuming all materialize
worst_case = total_exposure
by_category[category] = AggregatedRisk(
category=category,
total_exposure=total_exposure,
expected_loss=expected_loss,
worst_case=worst_case,
risk_count=len(cat_risks),
projects_affected=len(projects),
mitigation_cost=0,
residual_exposure=expected_loss
)
return by_category
def calculate_var(self, confidence: float = 0.95,
simulations: int = 10000) -> float:
"""Calculate Value at Risk using Monte Carlo simulation."""
import random
losses = []
risks = list(self.risks.values())
for _ in range(simulations):
sim_loss = 0
for risk in risks:
if random.random() < risk.probability:
sim_loss += risk.impact
losses.append(sim_loss)
losses.sort()
var_index = int(simulations * confidence)
return losses[var_index]
def generate_portfolio_profile(self) -> PortfolioRiskProfile:
"""Generate comprehensive portfolio risk profile."""
if not self.correlations:
self.detect_correlations()
total_exposure = sum(r.impact for r in self.risks.values())
expected_loss = sum(r.score for r in self.risks.values())
by_category = self.aggregate_by_category()
# Top risks by score
top_risks = sorted(self.risks.values(), key=lambda x: -x.score)[:10]
# Systemic risks
systemic = self.identify_systemic_risks()
systemic_triggers = [s['trigger'] for s in systemic if s['is_systemic']]
# VaR calculation
var_95 = self.calculate_var(0.95)
return PortfolioRiskProfile(
report_date=datetime.now(),
total_projects=len(self.projects),
total_risks=len(self.risks),
total_exposure=total_exposure,
expected_loss=expected_loss,
var_95=var_95,
by_category={k.value: v for k, v in by_category.items()},
top_risks=top_risks,
correlations=self.correlations,
systemic_risks=systemic_triggers
)
def suggest_mitigation_priorities(self) -> List[Dict]:
"""Suggest prioritized mitigation actions."""
priorities = []
# Systemic risks first
systemic = self.identify_systemic_risks()
for s in systemic[:5]:
if s['is_systemic']:
priorities.append({
"priority": 1,
"type": "systemic",
"target": s['trigger'],
"exposure": s['total_exposure'],
"projects": s['projects_affected'],
"recommendation": f"Portfolio-wide mitigation for {s['trigger']}"
})
# High-correlation risks
high_corr = [c for c in self.correlations if c.strength > 0.5]
for corr in high_corr[:5]:
r1 = self.risks.get(corr.risk1_id)
r2 = self.risks.get(corr.risk2_id)
if r1 and r2:
priorities.append({
"priority": 2,
"type": "correlated",
"target": f"{r1.description[:30]} / {r2.description[:30]}",
"exposure": r1.score + r2.score,
"projects": 2,
"recommendation": f"Joint mitigation via {corr.shared_triggers}"
})
# Individual high-impact risks
top_risks = sorted(self.risks.values(), key=lambda x: -x.score)[:10]
for risk in top_risks:
if not any(p['target'].startswith(risk.description[:20]) for p in priorities):
priorities.append({
"priority": 3,
"type": "individual",
"target": risk.description[:50],
"exposure": risk.score,
"projects": 1,
"recommendation": risk.mitigation or "Develop mitigation plan"
})
return sorted(priorities, key=lambda x: (x['priority'], -x['exposure']))
def generate_report(self) -> str:
"""Generate enterprise risk report."""
profile = self.generate_portfolio_profile()
lines = [
"# Enterprise Risk Aggregation Report",
"",
f"**Portfolio:** {self.portfolio_name}",
f"**Report Date:** {profile.report_date.strftime('%Y-%m-%d')}",
"",
"## Executive Summary",
"",
f"| Metric | Value |",
f"|--------|-------|",
f"| Total Projects | {profile.total_projects} |",
f"| Total Risks | {profile.total_risks} |",
f"| Total Exposure | ${profile.total_exposure:,.0f} |",
f"| Expected Loss | ${profile.expected_loss:,.0f} |",
f"| VaR (95%) | ${profile.var_95:,.0f} |",
"",
"## Risk Distribution by Category",
"",
"| Category | Risks | Projects | Expected Loss | % of Total |",
"|----------|-------|----------|---------------|------------|"
]
for cat, agg in profile.by_category.items():
pct = (agg.expected_loss / profile.expected_loss * 100) if profile.expected_loss > 0 else 0
lines.append(
f"| {cat} | {agg.risk_count} | {agg.projects_affected} | "
f"${agg.expected_loss:,.0f} | {pct:.1f}% |"
)
# Systemic risks
if profile.systemic_risks:
lines.extend([
"",
"## Systemic Risks (Portfolio-Wide)",
""
])
for trigger in profile.systemic_risks[:5]:
lines.append(f"- **{trigger}**")
# Top individual risks
lines.extend([
"",
"## Top 10 Individual Risks",
"",
"| Project | Risk | Prob | Impact | Score |",
"|---------|------|------|--------|-------|"
])
for risk in profile.top_risks:
lines.append(
f"| {risk.project_name} | {risk.description[:30]} | "
f"{risk.probability:.0%} | ${risk.impact:,.0f} | ${risk.score:,.0f} |"
)
# Correlations
high_corr = [c for c in profile.correlations if c.strength > 0.3]
if high_corr:
lines.extend([
"",
f"## Risk Correlations ({len(high_corr)} significant)",
"",
"| Strength | Shared Triggers |",
"|----------|-----------------|"
])
for c in high_corr[:10]:
lines.append(
f"| {c.strength:.0%} | {', '.join(c.shared_triggers[:3])} |"
)
return "\n".join(lines)
Quick Start
Initialize aggregator
aggregator = EnterpriseRiskAggregator("Regional Portfolio")
Add risks from Project A
aggregator.add_risk( "PRJ-A", "Downtown Tower", RiskCategory.MARKET, "Steel price increase", probability=0.7, impact=2000000, triggers=["steel_price_increase", "trade_restrictions"] ) aggregator.add_risk( "PRJ-A", "Downtown Tower", RiskCategory.LABOR, "Skilled labor shortage", probability=0.5, impact=1500000, triggers=["labor_shortage"] )
Add risks from Project B
aggregator.add_risk( "PRJ-B", "Hospital Wing", RiskCategory.MARKET, "Material cost escalation", probability=0.6, impact=1800000, triggers=["steel_price_increase", "supply_chain_disruption"] ) aggregator.add_risk( "PRJ-B", "Hospital Wing", RiskCategory.SCHEDULE, "Weather delays", probability=0.4, impact=500000, triggers=["weather_event"] )
Detect correlations
correlations = aggregator.detect_correlations() print(f"Found {len(correlations)} correlated risk pairs")
Identify systemic risks
systemic = aggregator.identify_systemic_risks() for s in systemic[:3]: print(f"Systemic: {s['trigger']} affects {s['projects_affected']} projects")
Generate portfolio profile
profile = aggregator.generate_portfolio_profile() print(f"Total Exposure: ${profile.total_exposure:,.0f}") print(f"VaR (95%): ${profile.var_95:,.0f}")
Get mitigation priorities
priorities = aggregator.suggest_mitigation_priorities() for p in priorities[:5]: print(f"Priority {p['priority']}: {p['recommendation']}")
Generate report
print(aggregator.generate_report())
Requirements
pip install (no external dependencies)