Qualitative Project Risk Analysis - 1

What is a qualitative project risk analysis, and how do I go about it?

What is qualitative project risk analysis?

·      In the project risk identification step

·         It is usual for a large number of risks to be identified

·         It is not productive to examine them all in detail

·      The qualitative analysis step in project risk management

·         Is designed to identify which project risk events should be of concern

·         It is done by ranking the various project risks

·         According to their likelihood and severity

Ranking project risks?

·      An analytical ranking of project risks is conducted

·         If this was not done subjectively during identification

·      To rank project risk events, it is necessary to understand their composition

·      Project risk events consist of three factors:

·         The nature of the project risk event

·         The likelihood or probability of its occurrence

·         The amount at stake

The composition of project risk events

Three Factors:

·         Event Description

·         Precisely what might happen to the project

It includes both

Recurring: Scaled events - severity increases
with decreasing frequency
Non-Recurring: Discrete events, one time only

·         Probability

·         How likely the event is to occur

·         Impact or Amount at Stake

·         Severity of the consequences to the project

Definitions - 1

·      Risk Event

·         A precise description of what might happen to the project's objectives

·         Including both recurring, scaled, events and non-recurring, one time only, or discrete events

·      Probability

·         The likelihood of occurrence

·         The ratio of the number of chances by which an event may happen (or not happen) to the sum of all chances of happening and not happening

Definitions - 2

·      Impact

·         An assessment of the adverse effect of a risk occurring

·         Impact may have both positive and/or negative affects on the project's objectives

·         Impact is usually measured on a subjective scale

·      Amount at Stake

·         The severity or extent of adverse consequences

·         I.e. Impact measured in monetary value

·      Risk Event Status

·         A measure of importance of a risk event

·         Also referred to as criterion value or simply its ranking

Ranking process concept

 Probability and Severity Scales for probability and severity and how they are used, as well as other techniques, are discussed in our next Issacon