Project Risk Management

3. PERFORM QUALITATIVE RISK ANALYSIS

Perform Qualitative Risk Analysis is the process of
prioritizing risks for further analysis or action by
assessing and combining their probability of
occurrence and impact. The key benefit of this process
is that it enables project managers to reduce the level
of uncertainty and to focus on high-priority risks.
PERFORM QUALITATIVE RISK ANALYSIS

- Inputs
 1. PROJECT MANAGEMENT PLAN
(RISK MANAGEMENT PLAN)
The risk management plan is a component of the project
management plan and describes how risk management activities
will be structured and performed. The risk management plan
includes the following:
• Methodology. Defines the approaches, tools, and data sources
that will be used to perform risk management on the project.
• Roles and responsibilities. Defines the lead, support, and risk
management team members for each type of activity in the risk
management plan, and clarifies their responsibilities.
• Budgeting. Estimates funds needed, based on assigned
resources, for inclusion in the cost baseline and establishes
protocols for application of contingency and management reserves.
• Timing. Defines when and how often the risk management
processes will be performed throughout the project life cycle,
establishes protocols for application of schedule contingency
reserves, and establishes risk management activities for inclusion
in the project schedule.
1. RISK MANAGEMENT PLAN

• Risk categories. Provide a means for grouping potential causes

of risk. Several approaches can be used, for example, a
structure based on project objectives by category. A risk
breakdown structure (RBS) helps the project team to look at
many sources from which project risk may arise in a risk
identification exercise.
• Reporting formats. Reporting formats define how the outcomes
of the risk management process will be documented, analyzed,
and communicated. It describes the content and format of the
risk register as well as any other risk reports required.
• Tracking. Tracking documents how risk activities will be
recorded for the benefit of the current project and how risk
management processes will be audited.
2. PROJECT DOCUMENTS
Project documents that can be considered as
inputs for this process include but are not limited
to:
Assumption log. The assumption log is used for
identifying, managing, and monitoring key
assumptions and constraints that may affect the
project.
Risk register. The risk register contains details of
each identified individual project risk that will be
assessed during the Perform Qualitative Risk Analysis
process.
Stakeholder register. This includes details
information related to all project stakeholder.
3. ENTERPRISE ENVIRONMENTAL FACTORS
4. ORGANIZATION PROCESS ASSETS

Already discussed in earlier slides.

PERFORM QUALITATIVE RISK ANALYSIS

- Tools and Techniques

1. EXPERT JUDGMENT
To ensure a comprehensive establishment of the
performing qualitative risk analysis, judgment, and
expertise should be considered from groups or
individuals with specialized training or knowledge on
the subject area, such as:
• Senior management,
• Project stakeholders,
• Project managers who have worked on projects in
the same area (directly or through lessons learned),
• Subject matter experts (SMEs) in business or project
area,
• Industry groups and consultants, and
• Professional and technical associations.
 2. DATA GATHERING (INTERVIEW)

▪ Data-gathering techniques that can be used for this process

include but are not limited to interviews.
▪ Interviews. Structured or semi-structured interviews can be
used to assess the probability and impacts of individual project
risks, as well as other factors.
▪ Generally, an interview is a formal or informal approach to
elicit information from stakeholders by talking to them directly.
▪ It is typically performed by asking prepared and spontaneous
questions and recording the responses.
 2. DATA GATHERING (INTERVIEW)

▪ Interviews are often conducted on an individual basis between

an interviewer and an interviewee, but may involve multiple
interviewers and/or multiple interviewees.
▪ Interviewing experienced project participants, sponsors, other
executives, and subject matter experts can aid in identifying and
defining the features and functions of the desired product
deliverables.
3. DATA ANALYSIS

• Risk Data Quality Assessment. Risk data quality assessment

is a technique to evaluate the degree to which the data about
risks is useful for risk management. It involves examining the
degree to which the risk is understood and the accuracy, quality,
reliability, and integrity of the data about the risk.
• 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 schedule, cost, quality, or
performance, including both negative effects for threats and
positive effects for opportunities.
• Assessment of other risk parameters. The project team may
consider other characteristics of risk (in addition to probability
and impact) when prioritizing individual project risks for further
analysis and action. e.g. urgency, manageability, controllability.
 4. INTERPERSONAL AND TEAM SKILLS

▪ Interpersonal and team skills that can be used for

this process includes but are not limited to facilitation.
▪ Facilitation improves the effectiveness of many of
the techniques used to identify individual project risks
and sources of overall project risk.
▪ A skilled facilitator can help participants remain
focused on the risk identification task, follow the
method associated with the technique accurately,
ensure clear risk descriptions, identify and overcome
sources of bias, and resolve any disagreements that
may arise.
5. RISK CATEGORIZATION

Risks to the project can be categorized by sources of

risk (e.g., using the risk breakdown structure (RBS),
the area of the project affected (e.g., using the work
breakdown structure (WBS), or other useful categories
(e.g., project phase, project budget, and roles and
responsibilities) to determine the areas of the project
most exposed to the effects of uncertainty. Risks can
also be categorized by common root causes.
6. DATA REPRESENTATION
Probability and Impact Matrix: Risks can be prioritized for
further quantitative analysis and planning risk responses based on
their risk rating. Ratings are assigned to risks based on their assessed
probability and impact. Evaluation of each risk’s importance and
priority for attention is typically conducted using a look-up table or a
probability and impact matrix. Such a matrix specifies combinations of
probability and impact that lead to rating the risks as low, moderate,
or high priority as given below.
Hierarchical charts: Where risks have been categorized using more
than two parameters, the probability and impact matrix cannot be
used and other graphical representations are required. For example, a
bubble chart displays three dimensions of data, where each risk is
plotted as a disk (bubble), and the three parameters are represented
by the x-axis value, the y-axis value, and the bubble size. An example
bubble chart is shown in Figure, with detectability and proximity
plotted on the x and y axes, and impact value represented by bubble
size.
 7. MEETINGS

▪ To undertake risk planning, identification, analysis and risk response

the project team may conduct a specialized meeting.
▪ Attendees at these meetings may include the project
manager, selected project team members and stakeholders,
anyone in the organization with responsibility to manage
the risk Identification and mitigating activities.
▪ The goals of this meeting include the review of previously
identified risks, assessment of probability and impacts (and
possibly other risk parameters), categorization, and
prioritization.
PERFORM QUALITATIVE RISK ANALYSIS

- Outputs
 1. PROJECT DOCUMENTS UPDATES

Project documents that may be updated include, but are

not limited to:
• Assumptions log updates. During the Perform
Qualitative Risk Analysis process, new assumptions may be
made, new constraints may be identified, and existing
assumptions or constraints may be revisited and changed.
The assumption log should be updated with this new
information.
• As new information becomes available through the
qualitative risk assessment, assumptions could change. The
assumptions log needs to be revisited to accommodate this
new information. Assumptions may be incorporated into the
project scope statement or in a separate assumptions log.
 1. PROJECT DOCUMENTS UPDATES

Project documents that may be updated include, but are

not limited to:
• Issue log updates.
Throughout the life cycle of a project, the project manager
will normally face problems, gaps, inconsistencies, or
conflicts that occur unexpectedly and that require some
action so they do not impact the project performance. The
issue log is a project document where all the issues are
recorded and tracked.
• Data on issues may include: Issue type, Who raised the
issue and when, Description, Priority, Who is assigned to
the issue, Target resolution date, Status, and Final solution
• The issue log should be updated to capture any new
issues uncovered or changes in currently logged issues.
 1. PROJECT DOCUMENTS UPDATES

Project documents that may be updated include, but are

not limited to:
• Risk register updates. As new information becomes
available through the qualitative risk assessment, the risk
register is updated. Updates to the risk register may include
assessments of probability and impacts for each risk, risk
ranking or scores, risk urgency information or risk
categorization, and a watch list for low probability risks or
risks requiring further analysis.
• In general, risk register captures detailed track record of
project risks including list of identified risks and list of
potential risk responses.
 1. PROJECT DOCUMENTS UPDATES

Project documents that may be updated include, but are

not limited to:
• Risk report updates. The risk report is updated to reflect
the most important individual project risks (usually those
with the highest probability and impact), as well as a
prioritized list of all identified risks on the project and a
summary conclusion.
• In general, risk report contains sources of overall project
risk, indicating which are the most important drivers of
overall project risk exposure includes summary information
on identified project risks, and their impact in terms of
threats and opportunities etc.