Risk Analysis (Qualitative)
Once identified, there are several qualitative ways for quantifying risk probability. All of this will be based on someone’s or some group’s assessment of the likelihood and effect of identified risks, augmented by knowledge from previous, similar initiatives if studies are available. Risk probability analysis can be assigned to a single individual, who is most frequently the project manager. Alternatively, a project manager may create a list of key risks and then ask the project team, customers, end users, sponsors, or subject matter experts to prioritise each item on the list. Each item may be ranked in a timely consensus this manner.
A risk matrix collects all known risks and orders or assigns a probability to the risk as well as a weight factor to the possible impact of the event occurring. Once all risks have been ranked or allocated in qualitative risk analysis, the probability and effect of distinct risks may be simply categorized as high, medium, or low. In certain circumstances, a “very high” categorization is utilised. Strong-probability risks with a high negative impact on the project should be the most concerned. Low likelihood and low effect risks are of the least concern.
Figure 1 depicts the typical format of a risk matrix.
Risk analysis using quantitative methods is more difficult than qualitative methods. Quantitative risk analysis necessitates more historical data and more rigorous analytical methodologies. Schwalbe researched the use of quantitative methodologies in certain types of projects. However, qualitative approaches are more commonly used in IT and technology projects and may be preferred to quantitative ones, particularly when aspects like likelihood and impact are difficult to measure. Spending extra effort establishing inexact risk measurements may not be beneficial to project planning if no such information exists.
