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Wednesday, February 20, 2013

Prioritized List of Quantified Risks

Do you remember that we had prioritized lists at the end of Qualitative Analysis and then picked up the ones at the top of the list and/or ones marked as “Needs more analysis” for Quantitative Analysis? 

If you don’t remember, I strongly suggest you go back, read the qualitative analysis, its output/updates to the Risk Register before proceeding further.

The purpose of this update/list is similar to the one we actually did at the end of Qualitative Analysis. At the end of Quantitative Analysis, we will try to arrange risks by either of the following: 

a. Risks that pose the greatest threat or Opportunities to the Project 
b. Risks that are most likely to impact the Project’s Critical Path
c. Risks that require the largest contingency reserves

Remember tornado Diagrams that we learnt about a few chapters ago? If we had created Tornado diagrams for our risks, this task of identifying those at the top of the list becomes pretty easy. 

Some important points to remember while doing this activity: 

a. Risks could be listed separately – we could have multiple lists (for ex: grouped by project objectives) 
b. All the information that went into our analysis must be properly documented and archived including details like who participated in the analysis, what info was used and how etc 
c. It would be a good idea to create Tornado Diagrams. It will help us identify the higher priority risks 

Do you remember that during our initial chapters on the Risk Management Framework, we had learnt the fact that a numerical rating can be assigned to our risks as a part of the Quantitative Risk Analysis process? The basis on which this rating was arrived at must be documented too. 

If your Organization does not have established processes/framework/templates for risk management, then you will have a lot more work to do when compared to organizations that have well established Risk Management processes. 

You may be wondering, why must I take the pain of doing all the documentation, why can I just do what is required for my current project and let the other PM’s worry about their projects? 

PMI expects us not only to follow sound Risk Management practices, but also expects us to create artifacts and share our knowledge so that, people who may take up project similar to ours need not reinvent the wheel that you have already invented. 

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Next: Trends in Quantitative Analysis

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