Planning is indeed important in every project but before that one must remember to identify record and rank the possible risks. Planning without considering risk will not yield the desired result and the entire planning is required to be done from the scratch. There is two important risk analysis namely quantitative and qualitative risk analysis. The former is about the numerical calculation and the latter is the first step in finding the likelihood of occurrence of the risk.
PMP certification course online focuses on the entire fraternity of project management including planning, creating a charter, resource leveling, identifying and analyzing risk, etc.
We would want to throw some light in detail about what is it, how to perform, and detailed process with examples in this blog.
Qualitative Risk Assessment
Before we get into the discussion about assessment let us understand about risk. According to PMBOK, the risk is defined as uncertainty that occurs which may have an impact on the project goal.
Therefore, risk assessment can be done by considering factors including the likelihood of occurrence of uncertainty, the rate at which it will affect the project goal, and the time it will occur.
In qualitative risk analysis, the identified risk are prioritized and scored based on the likelihood and impact.
Let us continue further to see how it is done in the coming sections. Alternatively, get in touch with us for a PMP certification training online to have practical experience in risk analysis.
How to Perform Qualitative Risk Analysis
It does not involve any math or formula but focuses on the details and follows the following steps as given below.
1. First identification of the risk is the key step in qualitative risk analysis. Who can do it? Yes, requires expert opinion and help. A team must be identified and directed to spot the possible uncertainties. This team must have the required skills and knowledge to rightly list down all the possible risk irrespective of the impact it creates in the project
2. After identifying all possible risks it must be segregated and before that must be recorded with all details. Every risk must be recorded at this stage in length with all information allowing the team to rank them at the next step.
3. After record all details the team must rank them based on the impact, time of occurrence, the possibility of occurrence, etc. Then it must be ranked as 1, 2 3, etc. This ranking will help at all stages to look into the risk and sort them before it affects the project
4. Now, it’s time to take action in the identified, recorded, and rated risk which is the crucial step in the qualitative risk analysis process. Develop the right strategy to address each risk.
5. After providing a way to solve the risks a continuous follow-up is required to
Qualitative Risk Analysis Process
The matrix given below explains the process. It is mapping the risk based on the rank in a matrix based on the likelihood and its impact.
The color-coding denotes the risk ranking with darker the color higher is the risk and red indicated the highest risk. Let us explain this further with an example.
PMP certification coaches project managers the entire process of analyzing the risk by evaluating them. Further, it explains how to develop a risk plan, monitor risk, and execute the responses based on need. The project manager can assign experts to support them in this entire process. Also, it gives a detailed idea about when to perform qualitative risk analysis.
Qualitative Risk Analysis Examples
Probability or Risk matrix
The impact represents the effect of the risk and the likelihood means the possibility of the risk occurrence. Let us rate the likelihood and impact as given below. 5 is the maximum.
|Impact||Probability||Risk score = Impact X Probability|
From the above table, you can understand that the higher the risk score means greater is the effect caused by the risk on the project. If the impact is positive then the effect is an opportunity and on the other hand, if the impact is negative then the risk is a threat to the project outcome.
Several other methods of risk analysis are listed below.
• Bow tie method – The risk event and project are lined up in 2 directions with the left side having all potential causes of the event and the right side the consequences of the event. This will allow tackling both the probability of occurrence and the impact to negate risk as much as possible
• SWIFT analysis – Structured What If the technique is done in a systematic manner where the team will investigate how the changes affect the project and evaluate the possibility of opportunity risks.
• Delphi Technique – Experts will be asked to fill questioners and the responses are collected and referred for further actions.
• Pareto Principle – This is a simple 80-20 rule which is based on 80% achievement and 20% effort. The managers will identify the most significant 20% risk to mitigate the 80% impact of it on the project goal.
Advantages of Qualitative Risk Analysis
1. It is an easy yet effective analysis method that requires only subject matter experts and not any mathematical skills.
2. Prioritization of impact and likelihood is easy in this method hence working on risk becomes quick before it affects the project goal.
3. The matrix representation method makes it possible to represent easily and hence working on the top priority risk eliminates several risk factors.
However, due to the limitation that no metrics are produced as perception plays a major role. Thus the accuracy depends on experience. An experienced professional can manage this limitation and hence proper PMP training is recommended for every project manager.
From the above details, it is very clear that qualitative risk analysis is the key to a successful project outcome. It helps in identifying, recording, ranking, and working on risk to eliminate them. Expertise is required to identify the possibility of occurrence of the risk, its impact, and the frequency.
Register for a PMP training with StarAgile and get all your doubts clarified to perform as the best project manager in your organization.
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