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Thursday, June 30, 2011

Chapter 52: Analyzing Risks

In the previous chapter, we learnt how to identify risks. Identifying risks is a big task and if we screw up this step, the results can be disastrous. However, if we follow all the guidelines as explained in the PMBOK, we can be certain that our risk identification process was done efficiently. The next step for us is to analyze these risks. We are going to learn exactly that in this chapter.

So, lets get started!!!

Analyzing Risks

Once the risks have been identified, you need to answer two main questions for each identified risk:
1. What are the odds that the risk will occur,
2. If it does occur, what will its impact be on the project objectives?

You get the answers by performing risk analysis.

There are two main forms of Risk Analysis:
1. Qualitative Risk Analysis &
2. Quantitative Risk Analysis

Qualitative Risk Analysis

This is used to prioritize risks by estimating the probability of the occurrence of a risk and its impact on the project.

Quantitative Risk Analysis

This is used to perform numerical analysis to estimate the effect of each identified risk on the overall project objectives and deliverables.

Usually, you prioritize risks by performing qualitative analysis on them before you perform quantitative analysis. We will learn both one by one in the subsequent chapters.

Prev: Identifying Risks

Next: Performing Qualitative Analysis

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