Risk analysis for portfolio management

"CIOs who are serious about portfolio management need to be serious about statistical risk management". This sentence is tucked away soemwhere in the second section of this article, but it summarises the message.
An interesting insight is that many organisations can't or won't quantify project risks. Because there are no risk numbers to be compared with the one hard number that is know - the budget - the tendency is to base portfolio decisions on budget alone.
The articlae discusses a couple of methods for quantifying risk - Decision tree analysis and Monte Carlo.
And the bottom line? It's a question of leadership to ensure that risk is taken into account.
Playing with Fire - Risk Management - importance of quantifying risk; use statistical simulations to map risks and probabilities; Develop risk analysis process - CIO Magazine Jul 1,2003