Qualitative Risk Analysis
Qualitative Risk Analysis is a measure of risk or asset value based on a ranking or separation into descriptive categories such as low, medium, high; not important, important, very important etc. or on a scale from 1 to 5.
Qualitative Risk Analysis includes methods for prioritizing the identified risks for further action, such as Quantitative Risk Analysis or Risk Response Planning. Organizations can improve the project’s performance effectively by focusing on high-priority risks. Qualitative Risk Analysis assesses the priority of identified risks using their probability of occurring, the corresponding impact on project objectives if the risks do occur, as well as other factors such as the time frame and risk tolerance of the project constraints of cost, schedule, scope, and quality.
Qualitative Risk Analysis is usually a rapid and cost-effective means of establishing priorities for Risk Response Planning, and lays the foundation for Quantitative Risk Analysis, if this is required. Qualitative Risk Analysis should be revisited during the project’s life cycle to stay current with changes in the project risks. Qualitative Risk Analysis requires outputs of the Risk Management Planning and Risk Identification processes. This process can lead into Quantitative Risk Analysis or directly into Risk Response Planning.
Inputs of Qualitative Risk Analysis:
- Organizational Process Assets – Risk Database of past projects
- Project Scope Statement – Projects of a common or recurrent type tend to have more well-understood risks. This can be evaluated by examining the project scope statement
- Risk Management Plan
- Risk Register – list of identified risks
Tools and Techniques used in Qualitative Risk Analysis:
- Risk Probability and Impact Assessment – Risk probability assessment investigates the likelihood that each specific risk will occur. Risk impact assessment investigates the potential effect on a project objective such as time, cost, scope, or quality, including both negative effects for threats and positive effects for opportunities. Probability and impact are assessed for each identified risk.
- Probability and Impact Matrix
- Risk Data Quality Assessment
- Risk Categorization
- Risk Urgency Assessment
Output of Qualitative Risk Analysis: Updated Risk Register / Tracker with the following information
- Relative ranking or priority list of project risks
- Risks grouped by categories
- List of risks requiring response in the near-term
- List of risks for additional analysis and response
- Watchlists of low priority risks
- Trends in qualitative risk analysis results