Qualitative Risk Analysis

Posted on August 10, 2009 by


A Qualitative Risk Analysis prioritizes risks based on their probability of occurring and the potential impact if they do occur. It is performed as the fourth edition PMBOK®’s Perform Qualitative Risk Analysis process. First, decide which risks will be included in the Qualitative Risk Analysis. The listing of project risks can be found in the project’s Risk Register. Also, refer to the Risk Management Plan for the project’s definitions of probability and impact. Then the probability of each risk occurring is estimated and this is multiplied by the number representing how severe the impact would be if the risk occurs. The risks are then prioritized based on which have the largest ratings, as these will be the most important risks to invest in planning and monitoring.

Here is an example of Anna baking a batch of cookies. Her impact if the risk occurs definitions are as follows: 0 to .10 is not noticeable; .11 to .25 is noticeable but not severe; .26 to .75 is edible, but not presentable to anyone but family members; and .76 to 1.00 is inedible and they must be thrown out.

She decides to prioritize four risks: forgetting to add sugar, burning the cookies, cookie dough not thoroughly mixed, and cookies breaking when they are removed from the sheet. She first estimates the probability of occurrence. She believes there is a 2% chance she could forget to add sugar, so she lists .02 for the probability of this risk, whereas she believes there is a 15% chance of burning the cookies, so she lists .15 for that risk. Next she determines the impact rating using her impact definitions as a guide. Forgetting the sugar would make the cookies inedible, so she rates that a .90, whereas if the dough isn’t quite mixed thoroughly, that would only be a .20 rating. Next she multiplies the probability by the impact. For the risk of the dough not being mixed thoroughly, she multiplies .10 by .20 which is 0.020. After obtaining all four ratings, she examines which risks have the highest ratings as they are the risks deserving the most attention. The risk of the cookies breaking when removed from the sheet has the overall highest rating at 0.175, so it is the top priority risk. Also see the earlier posting of Perform Qualitative Risk Analysis Process (posted April 3, 2009) and Risk Register (posted March 27, 2009).
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