Here is How To Do Risk Analysis for your project. After you have identified the risks your project faces, you need to do a risk analysis to determine which ones call for a risk response and which do not. The purpose of risk analysis is to rank the list of identified risks in order of significance or importance. Your risk analysis focuses on qualitatively assessing the probability that the risk will occur and the magnitude of its impact if it does. You will use this qualitative risk analysis to decide which risks are important enough to warrant a risk response. Risk Management Main Page
How To Do Risk Analysis: Step 1 – Qualitative Analysis
Qualitative analysis assesses how much the risk could hurt the project but is doesn’t use any numbers. Qualitative analysis has the benefits of being cheap and fast but it lacks precision. You can easily do qualitative analysis by meeting with three or four team members and stakeholders in the cafeteria for coffee. You list the risks you have identified that can possibly affect the project. For each risk, you ask them to assess whether it is very likely to occur, moderately likely to occur or unlikely to occur. When you have that information from each attendee, you ask them about how much damage the risk will cause if it does occur. Will it cause just a little damage, a medium amount of damage or a lot of damage?
As you can see, this is not a very precise method but it does give you the opinions of your stakeholders and team members. If you have any risks that are very likely to occur and will cause significant damage, you will plan a risk response for those risks. The less significant risks you have identified are things you will watch out for but you won’t plan a formal risk response for them. On smaller projects, you will probably limit the risk analysis to these qualitative techniques and planning risk response(s) for the significant risks. Small Project Risk Management
You may also decide that one or two risks are so significant you should preform a quantitative risk analysis. The cost of the higher-level quantitative risk analysis probably requires the sponsor’s approval. Risk Responses
How To Do Risk Analysis: Step 2 – Quantitative Analysis
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