Published: 10th December 2009
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The process of risk identification generates a list of risks. The next step after risk identification is risk assessment. Risk assessment involves identification of high-priority and high-impact risks.

Qualitative risk analysis involves identifying the consequence and likelihood of risks on the project objectives. It also enables ranking of risks for prioritization of resources to mitigate the risks. Qualitative risk analysis is a cost-effective and time-saving method for analyzing risks.

Key inputs required to perform qualitative risk analysis are:

1) Historical information and lessons learned from past projects

2) Project scope statement

3) Risk management plan

4) Risk register

Various tools and techniques are available for performing qualitative risk analysis. These are listed below:

Risk probability and impact assessment: This technique helps in evaluating the likelihood and consequence of a risk on the project. Risk likelihood is the possibility that the risk will occur and it is primarily accomplished by using expert judgment. The likelihood and consequence of risks are assessed in interviews or meetings comprising people having experience in dealing with risks on similar projects.

Probability and impact matrix: Risks are further assessed and ranked using the likelihood/consequence matrix. This matrix helps in rating the risks as high, moderate, and low. The values of the risks determine the risk mitigation planning for the risks. Risks with high likelihood and high consequence need to be addressed as a priority.

Data precision ranking: This technique involves analyzing the quality of data gathered for evaluating the risk. The parameters needed for analyzing data are:

1) Quality of data used

2) Availability of data regarding risks

3) Risk understanding

4) Reliability and integrity of the risk data

5) Accuracy of the data

Risk categorization: This technique involves categorizing risks by source, areas of project affected, or project phase affected. This categorization helps in devising effective risk responses.

Risk urgency assessment: This technique involves analyzing the urgency of addressing a risk.

The key benefit of performing qualitative risk analysis is that it helps in deriving a relative ranking of project risks. It is specifically helpful for an initial screening of risks when a quick assessment is needed.

PM Pathway's risk register helps to identify, record, rank (likelihood/consequence) and mitigate project risks. In conjunction with our other project risk management tools you can plan and run your own risk management workshop.

PM Pathway was established to provide affordable access (for all project management professionals and students) to high quality, proven project management templates to improve the outcome of their projects. They have been developing templates and procedures for clients on a consultancy basis for over 15 years and now offer these same tools to the broader project management community via their website. For more information, visit www.pmpathway.com.

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