Section Summary – Qualitative Risk Analysis

In the previous few chapters in this section, we took a detailed look at what qualitative risk analysis is, the inputs that are required to perform this analysis and the tools & techniques that we will be using during this analysis. Let us now quickly summarize what we have learnt in this section so far:

• The purpose of qualitative risk analysis process is to prioritize risks in order to determine which risks require additional analysis. This helps the risk management team to focus on the higher priority risks.
• There are 4 inputs to this process:

o Risk Register
o Risk Management Plan
o Project Scope Statement &
o Organizational Process Assets

• There are a total of 6 tools & techniques that we learnt in this section. They are:

1. Risk Probability & Impact Assessment
2. Probability & Impact Matrix
3. Risk Data Quality Assessment
4. Risk Categorization
5. Risk Urgency Assessment
6. Expert Judgment

• Risk Probability & Impact Assessment provides us with the initial risk rating for each of the risks that we have identified so far. To arrive at this risk rating, we will be using the definition of risk probability and impact that we defined when the Risk Management Plan was created
• The Risk Probability & Impact Matrix is used to assign a risk score to our risk and categorize it as “High-Medium-Low” priority
• Risk Data quality Assessment focuses on making sure that the information we are using to perform the risk analysis activities is unbiased and credible. This is because; conducting risk analysis using poor quality data may result in results that are useless. Frankly speaking, if we cannot trust our data or information, how can we trust the findings that were made based on that data or information?
• The idea of Risk Categorization is to uncover areas of risk concentration so that we can create effective responses to handle them. This is because; dealing with sources of risks is easier and cost effective than dealing with each risk individually. In fact, it can have a greater level of effectiveness as well
• The purpose of this risk urgency assessment technique is to identify near term risks. We are trying to determine which risks are to be considered urgent. In other words, we are trying to identify those risks that require our immediate attention
• Expert Judgment refers to the decisions or suggestions given by knowledgeable experts during the various activities in qualitative risk analysis. The individuals who provide us with their expert judgment are called as “Experts”

By now you should have a very good idea and understanding of the Qualitative Risk Analysis process. To wrap up this section you need to:
• Remember what tools are used in this process
• Remember what each tool does and produces
• Understand that not all tools are used in each process

Trivia:

Are you wondering that I haven’t touched upon the topic of what is the output of this whole Qualitative Risk Analysis process? If you did then you deserve a big pat on the back. Every process creates some sort of output and our Qualitative risk analysis is no different. But, I haven’t covered it in this section because; the whole of the next section is going to be dedicated just to cover that.

If you did not think about the output of this process, no worries. Just brush up your PMBOK basics and re-read some of the initial chapters to refresh your memory and you will be on your way to being a Risk Management Professional.

Prev: Expert Judgment

Next: Updates to Risk Register after Qualitative Analysis

Risk Urgency Assessment

In the previous few chapters we have covered a majority of the tools and techniques used in qualitative risk analysis. We have gathered a lot of information about the risk including its probability, impact and category. Now, the next logical step would be to identify those risks that are near-term or have a greater chance of happening in the near future so that we can be ready for them. Isn’t it? This is where the Risk Urgency Assessment comes into picture.

Risk Urgency Assessment

The purpose of this risk urgency assessment technique is to identify near term risks. We are trying to determine which risks are to be considered urgent. In other words, we are trying to identify those risks that require our immediate attention.

How to Identify a Near Term Risk?

According to the PMBOK guide, we can identify near-term risks by considering either/all of the below factors:

a. Time Available to put a risk response into motion – With some risks, the risk management team needs a certain amount of time to implement the response and similarly in some cases the response could be useful only when implemented within a certain timeframe. For ex: In case of opportunities (positive risks) the opportunities may not exist forever. They may become irrelevant after a few days. So, unless the project team implements the response to the positive risk immediately (within the open window) the whole activity of responding to the opportunity could be useless. There could also be scenarios where a response could totally eliminate a risk if implemented within a certain timeline. If the timeline is missed the response can only mitigate the risk and not eliminate the same.
b. The symptoms and/or warning signs of the risk – Symptoms or Warning signs are also known as Risk Triggers. Risk triggers can help us identify if a risk requires an immediate or urgent response. Some risk triggers may allow only a small response window for the risk management team to handle it. Sometimes, the risk trigger itself could be quite large and we may be forced to implement the response even before all the conditions are met. For ex: let us say one of the risks is missing a schedule deadline where the symptom is a missed deadline. A good manager may implement a response to eliminate this risk even before the schedule deadline is actually missed. Isn’t it?
c. Risk rating score – This is fairly straight forward. In the previous chapters, we assigned a numeric rating score based on the risks probability and impact. Risks that have a higher score are typically risks that may occur pretty soon.

By using all the information outlined above, the team will label a few of the identified risks as near-term risks so that the team can prepare themselves to handle them when the risk events actually materialize.

Prev: Risk Categorization

Next: Expert Judgment