Project Risk Analysis: Qualitative and Quantitative Approaches

The assignment content discusses risk analysis and qualification. Risk is defined as any untoward occurrence that has negative results in a process and impacts an organization's overall functioning. The article explains the two primary components of risk: probability and impact. It also describes the risk management process, highlighting the role of risk analysis in identifying likelihood and consequences. Qualitative risk analysis is introduced as a method for describing risk probabilities and impacts without numerical values. The article provides inputs, outputs, and tools used for qualitative risk analysis, including brainstorming, SWOT analysis, cost analysis, and decision drivers. Finally, it explains the concept of a risk matrix, which helps to describe risk analysis in a clear manner.

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Project
Risk Analysis | Risk Qualification
Student
ID
University

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Risk is defined as any untoward occurrence which has negative results in the process and has
negative impact on overall functioning of an organization.
Risk Analysis is assessment of risks and prioritizing the risks through set of tools and techniques
in order to assess the damage to be done due to particular Risk.
Risks has two Primary components,
These are, 1. Risk Probability or in other terms Probability of occurrence of any risk
And the other component is 2. Impact of particular risk.
Risk Analysis is part of overall Risk Management Process.
The Figure below is highlight of complete Risk Management Process.
Figure 1

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As mentioned in figure 1, Risk Analysis is to find out answers for, what are the likelihood and
consequences of the risk?
Risk Analysis is done in two ways,
1. Qualitative Risk Analysis, &
2. Quantitative Risk Analysis
Qualitative Risk Analysis is defined as analyzing the risk qualitatively. In other words
detailed description analysis of risk is carried out in Qualitative Risk Analysis. Qualitative
Risk analysis doesn’t counts the numerical values of probability or impact values; it depends
on describing the probability and impact of the risks (Bansal, S., 2014).
Qualitative Risk Analysis inputs are Risk register, Risk Management Plan, Scope Baseline &
historical evidences helpful to find out accurate analysis reports.
Qualitative Risk Analysis outputs are Probability matrix description, Impact scores
description and conclusion or comment section (Stackpole, C.S., 2017).
Relationship between Risk Analysis, Probability and Impact (Consequences) is,
Risk = f (probability, consequences)

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Figure below gives appropriate overall relationship
Tools and Techniques used for Qualitative Risk Analysis are,
 Brainstorming
 SWOT Analysis
 Cost Analysis
 Decision drivers
 Expert Judgment
 Root cause investigations (DoD Guide, 2015)
Figure 2

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Figure below describes the Risk Matrix,
Risk Matrix is set of tool which helps in describing the risk analysis in crystal clear manner.
The components of Risk matrix are
Red (High Risk), Yellow (Moderate Risk), Green (Low Risk).
Accordingly the scores are set in the matrix and yield the results of overall risk analysis.
Risk Matrix components include performance scores, Likelihood scores, Schedule scores.
Its time effective analysis hence yields Analysis in crystal clear manner.
Figure 3

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A clearly defined Probability and Impact scores makes all the difference in overall risk
analysis assessments. As defined in the formula above, i.e.
Risk = f (probability, consequences)
Probability and Impact have direct correlation with the Risks. Higher the probability and
consequences score higher will be the Risk. Lower the Probability and Consequences scores
lower will be the Risk. Milder or Moderate the Probability and consequences score milder
will be the risk (Kerzner, H., 2009).
References
1. Bansal, S. (2014). Differences between Quantitative and Qualitative Risk Analysis.
iZenBridge (Accessed from: https://www.izenbridge.com/blog/differentiating-
quantitative-risk-analysis-and-qualitative-risk-analysis/ (Accessed on: 20.03.2017).
2. Stackpole, C.S.Qualitative risk analysis inputs and outputs you should know for
PMP exam (Accessed from: http://www.dummies.com/careers/project-
management/pmp-certification/qualitative-risk-analysis-inputs-and-outputs-you-
should-know-for-the-pmp-certification-exam/ (Accessed on: 20.03.2017).
3. DoD Guide. (2015). Risk, Issue, and, Opportunity Management Guide for defense
acquisition programs,Pg. 5.
4. Kerzener, H.(2009). Project Management: A systems approach to Planning,
Scheduling, and Controlling. Tenth Edition, John Wiley & Sons, Inc.