Qualitative Risk Analysis assesses the impact and likelihood of the identified risks and develops prioritized lists of these risks for further analysis or direct mitigation.
The project team assesses each identified risk for its probability of occurrence and its impact on project objectives. Project teams may elicit assistance from subject matter experts or functional units to assess the risks in their respective fields.
Qualitative risk analysis can be used by project teams:
· As an initial screening or review of project risks.
· When a quick assessment is desired.
· As the preferred approach for some simpler and smaller projects where robust and/or lengthy quantitative analysis is not necessary.
Qualitative analysis provides a convenient and “user-friendly” way to identify, describe, and characterize project risks.
Risk identification, as mentioned in 2-2.3, results in the generation of a risk register. The risk register can be sizeable; it is necessary to evaluate and prioritize the risk events identified in the risk register. Evaluation and prioritization is typically accomplished by the project team and is an iterative process and can take place at various points in project development. In some cases, the project team may enlist help from cost risk experts and subject matter experts to evaluate and prioritize the risks.
A thoroughly developed register of risks that may affect project objectives is helpful. We sometimes find ourselves in situations where moving forward is difficult because of indecision. Identifying, describing, and assessing project risks allow us to prioritize them. Prioritization can free us from indecision by providing specific, documented risk events that we can act on to shift the odds in favor of project success. Prioritizing risks that present the highest potential for significantly affecting project objectives gives Project Managers the information necessary to focus project resources. Prioritization helps us make decisions in an uncertain environment and address project risk in a direct and deliberate manner.
Exhibit 3-2 offers an example of a qualitative risk matrix. Qualitative analysis can provide a prioritized list of risks.
Qualitative analysis utilizes relative degrees of probability and consequence for each identified project risk event in descriptive non-numeric terms (Exhibit 3-3).