Risk Analysis Overview

🔍 Perform Qualitative Risk Analysis

Start with a long list of risks from the Identify Risks process. Prioritize them subjectively based on probability and impact to decide which need planned responses.

Key Inputs

Risk Register 📋
Project Management Plan (including Risk Management Plan) 📑
Project Documents 📄
Organizational Influencing Factors 🏢

Qualitative vs. Quantitative Analysis

🧠 Qualitative: Subjective evaluation using scales (e.g., 1-5 or Low-High). Example: Probability 3 x Impact 4 = 12.

📈 Quantitative: Measurable ratings (e.g., 65% probability x $40,000 impact = $26,000).

💡 Exam Tip: Remember the order: Qualitative (L) comes before Quantitative (N) in the alphabet!

🛠️ Methods for Qualitative Risk Analysis

Risk Data Quality Assessment

📊 Assess accuracy and reliability of risk data to validate risks.

Risk Categorization

🗂️ Use Risk Breakdown Structure (RBS) to group risks by source or work package.

Probability and Impact Matrix

📈 Plot risks to prioritize those needing quantitative analysis.

Risk Parameters

⚡ Evaluate urgency, dormancy, manageability, and strategic impact.

Probability and Impact Matrix Example

1

No Real Impact

2

Small to medium reduction of time or cost reserves

3

Medium to large reduction of time or cost reserves

4

Over budget or behind schedule or both (0-15%)

5

Unacceptably over budget or behind schedule or both (over 15%); possible physical danger or project failure

Risks to the right of the diagonal (high-risk area) move to quantitative analysis.

Rating Scales

1 (Low): No real impact
2 (Medium): Small to medium reduction of reserves
3 (Medium-High): Medium to large reduction of reserves
4 (High): Over budget or behind schedule (0-15%)
5 (Fact): Unacceptably over budget/schedule (>15%) or project failure

📈 Perform Quantitative Risk Analysis

Analyze high-priority risks from qualitative analysis using measurable data (e.g., time, cost). Determines:

Which risks need response plans ⚠️
Overall project risk exposure 📊
Probability of meeting objectives 🎯
Cost and schedule reserves 💰⏰
Realistic targets 📅

Methods for Quantitative Analysis

Expert Judgment 🧠

Leverage team and risk specialists for insights.

Data Gathering 📋

Use interviewing to collect precise data.

Data Analysis 📊

Includes sensitivity analysis, decision tree analysis, and simulations.

Monte Carlo Analysis 🔢

Simulates project outcomes to evaluate risks, probabilities, and critical paths.

Sensitivity Analysis 🌪️

Compares risk impacts, often visualized with a tornado diagram.

Expected Monetary Value (EMV) 💸

Calculates risk impact: EMV = Probability x Impact (e.g., 65% x $40,000 = $26,000).

📑 Artifacts of Risk Analysis

Qualitative Risk Analysis

Updated Risk Register 📋
Project Management Plan 📑
Assumptions Log 📝
Issue Log 📌
Risk Report 📊
Watch List 👀

Quantitative Risk Analysis

Prioritized List of Quantified Risks 🔝
Probability of Meeting Objectives 🎯 (e.g., 80% chance of meeting schedule)
Quantitative Risk Trends 📈
Contingency Reserves 💰⏰
Overall Risk Exposure 📊
Recommended Risk Responses 💡