Risk Managment 11.3 Perform Qualitative Risk Analysis

Quick Link to Risk Management

Risk Management 11.6 Monitor and Control Risks

Risk Management 11.5 Plan Risk Responses

Risk Management 11.4 Perform Quantitative Risk Analysis

Risk Management 11.3 Perform Qualitative Risk Analysis

Risk Management 11.2 Identify Risks

Risk Management 11.1 Plan Risk Management

11.3 Perform Qualitative Risk Analysis

Qualitative risk analysis is the process of assessing the likelihood and impact of identified risks and prioritizing them according to their potential effect on project objectives. This process id accomplished using established qualitative methods and tools. The purpose is to help the project team focus on high priority risk and also to lay the foundation for quantitative analysis should it be needed. Qualitative analysis takes relatively less time and is less expensive to perform when compared to quantitative analysis.

Perform Qualitative Risk Analysis
Inputs	Tools	Outputs
1.       Risk register 2.       Risk management plan 3.       Project scope statement 4.       Organizational process assets	1.       Risk probability and impact assessment 2.       Probability and impact matrix 3.       Risk data quality assessment 4.       Risk categorization 5.       Risk urgency assessment 6.       Expert judgment	1.       Risk register updates

Four Key Inputs for Perform Qualitative Risk Analysis:

1.       Risk register: At this step, the list of identified risks would be available.

2.       Risk management plan: The risk plan provides assignment of roles and responsibilities (for qualitative analysis activities), stakeholder risk tolerance, definitions of probability and impact, risk categories that should be considered and the monetary and time resource to accomplish the risk activities.

3.       Project scope statement: The scope statement helps the team to understand the basic nature of the project. Recurring, common project are inherently less risky because they have become known and are more predictable. Projects involving state-of-the-art technology or a high degree of complexity tend to be more risky.

4.       Organizational process assets: Information about risks on previous projects, studies of similar projects by risk specialists and knowledge from the lessons learned database are used at this step.

Six Key Tools for Perform Qualitative Risk Analysis:

1.       Risk probability and impact assessment: Risk probability is the likelihood that a risk will occur and risk impact (consequence) is the effect on project objectives if a risk event does occur. Qualitative descriptions of both characteristics may range from very high to very low.

2.       Probability and impact matrix: A matrix may be constructed that assigns probability and impact ratings to individual risk events. The scales used to assigns the ratings could employ subjective, ordinal data such as “low, moderate, and high”. Alternatively, the scales could use cardinal scales that are numeric.

3.       Risk data quality assessment: The availability of data, reliability of that data, source of the data and uncertainty in measuring the data all have an impact on risk. A credible risk analysis requires accurate and unbiased data. The quality of risk data is often directly related to previous experience with similar project. Therefore, the risk data may be lacking or unreliable for highly unique project for which the performing organization has little experience.

4.       Risk categorization: The RBS (risk breakdown structure) may be helpful in grouping risks into related categories. Risk responses can be more effective if common patterns in the risks are known.

5.       Risk urgency assessment: Some risks require near-term responses and may therefore be considered more urgent.

6.       Expert judgment: Used to more accurately assess the probability and potential impact for each individual risk event.

One Key Outputs for Perform Qualitative Risk Analysis:

1.       Risk register updates: The risk register is updated with the following information from qualitative analysis:

Relative ranking or priority list for the project: The overall risk ranking produce risk scores that can be compared among projects. The information can be useful in several in ways: support recommendations to initial, continue or cancel a project; assign the right people to various projects; and help support a benefit-cost analysis on a project.

Risk can be prioritized in numerous ways-by severity of impact (high, moderate or low), by timing of the response (immediacy action, later action), by WBS level and by category (cost, schedule, procurement, technical and quality).

Risk grouped by categories: Root cause analysis may reveal common causes or patterns among certain risks.

Cause of risk or project areas requiring special attention: Similar to the notion of root cause analysis. There may be concentrations or patterns in the risks that make them easier to organize and manage.

Risks requiring near-team response: Risks that require immediate responses should be organized into separate groups.

List of risk for additional analysis management: Risk with high or moderate impacts may be further analyzed using additional techniques.

“Watch list” of low priority risks: Qualitative analysis may have revealed risks that are considered low but should be monitored for any changes.

Trend in qualitative risk analysis results: Trends in the risk results may become apparent and make further risk management either more important or less important.