Project Risk Management – Perform Qualitative Risk Analysis

This process prioritizes risks for further analysis or action by assessing and combining their probability of occurrence and impact. It enables project managers to reduce the level of uncertainty and to focus on high-priority risks.

Establishing definitions of the levels of probability and impact can reduce the influence of bias. This process is usually a rapid and cost-effective means of establishing priorities for Plan Risk Responses and lays the foundations for Perform Quantitative Risk Analysis.

Let’s take a look at the Inputs, Tools and Techniques, and Outputs of this process:

1)      Risk Management Plan

·         Include:

·   Roles and responsibilities for conducting risk management

·   Budgets

·   Scheduled activities for risk management

·   Risk categories

·   Definitions of probability and impact

·   Probability and impact matrix

·   Revised stakeholders’ risk tolerance

2)      Scope Baseline

·         Evaluate risks compared to scope baseline

3)      Risk Register

·         Contains information that will be used to assess and prioritize risks

4)      Enterprise Environmental Factors

·         May include:

·   Industry studies of similar projects by risk specialists

·   Risk databases that may be available from industry or proprietary sources

5)      Organizational Process Assets

·         May include information on prior, similar completed projects

6)      Risk Probability and Impact Assessment

·         Risk probability = Investigates the likelihood that each specific risk will occur

·         Risk Impact =Investigates the potential effect on a project objective such as schedule, cost, quality, or performance, including both negative and positive effects.

·         You can assess risk in interviews or meetings with participants

7)      Probability and Impact Matrix

·         This is a grid for mapping the probability of each risk occurrence and its impact on project objectives if that risk occurs. They are prioritized using a look-up table or a probability and impact matrix and rated high, moderate and low.

8)      Risk Data Quality Assessment

·         A technique to evaluate the degree to which the data about risks is useful for risk management. It examines the degree to which the risk is understood and the accuracy, quality, reliability and integrity of the data about the risk.

9)      Risk Categorization

·         Categorize risk by sources of risk (Risk breakdown structure – RBS) to determine the areas of the project most exposed to the effects of uncertainty. It can also be categorized by root causes to help determine work packages, activities, project phases or even roles in the project.

10)   Risk Urgency Assessment

·         Risks that need action in the near-term are more urgent to address. Using indicators to detect the risk, time to affect a risk response, systems and warning sings, and the risk rating are important.

11)   Expert Judgment

·         Required to assess the probability and impact of each risk to determine its location in the matrix.

12)   Project Documents Updates

·         Risk register updates

·         Assumptions log updates

Source: PMBOK 5^th ed.