Risk Management processes : Perform Qualitative Risk Analysis

Purpose

• Focus on the high-priority risks through qualitative risk analysis
  • At qualitative risk analysis process, you will arrange risks based on how much they can affect the project.
  • In risk identification, you should adopt a “No Restriction” policy where you encourage the identification of all possible risks.
    • Because of that, you are likely to discover many risks, but many of them will be of low impact on the project.
  • Qualitative analysis will filter those risks (into a watch list) and pinpoint risks that are worthy of further analysis.
  • This analysis has advantages of being relatively simple and fast and it usually yields good results.
    • It is so useful that in many projects you are able to proceed to risk response right after doing qualitative risk analysis.
    • However, this process is subjective since it depends on participants’ opinions and experience.
    • You should be particularly concerned with participants’ biases.
  • It is easy to use and can foster a common understanding of the different levels of probability and impact.
• Advices
  • A qualitative risk analysis requires accurate and unbiased data if it is to be credible.
  • Use a risk matrix
  • The most widely used tool for this analysis is the risk matrix.
  • You can customize a risk matrix (to be more relaxed or stringent) based on the specific risk tolerance for the project.

Inputs

• Project management plan
  • Risk management plan
    • Purpose
      • You will find useful information like the risk matrix and risk tolerance.
    • Roles and responsabilities for conducting risk management
    • Budgets for risk management
    • Schedule activities for risk management
    • Risk categories
    • RBS
    • Definitions of probability and impact
    • The probability and impact matrix
    • Stakeholders risk thresholds
  • Project type and an understanding of the work needed to complete the project
• Project documents
  • Assumption log
    • Assumptions to test
  • Risk register
    • Purpose
      • To know the list of identified risks.
      • List of potential risks
  • Scope baseline
    • Purpose
      • Basically it will tell you what is your project.
      • If the scope is similar to other projects that were done before then you can use some of the assessment already done.
        • Not to copy and past but also not to start from scratch.
    • Project scope statement
    • WBS
    • WBS dictionary
  • Stakeholder register
    • Potential risk owners
• Entreprise Environmental Factors (EEF)
  • Purpose
    • You can find industry specific risks and checklists.
  • Industry studies of similar projects
  • Published material, including data bases or checklists
• Organizational Process Assets (OPA)
  • Purpose
    • Here, you will find the lessons learnt.
    • Knowing the effect of risks on similar projects can help you guess their possible effect on the current project.
  • Historical records
  • Scales for probability and impact
    • if they are standardized for your department or company
  • Data about the risks to be used during this step to measure their precision

Tools and Technics

• Expert judgment
  • Risk workshops
  • Interviews
    • Possibility of bias
      • Be careful of biases by asking experts to justify their opinions as much as possible.
• Data gathering
  • Interviews
    • Trust and confidentiality encouraging honest and unbiased assessments
  • Determine Additional Information Needed
  • Determine Frequency and Timing
• Data analysis
  • Risk Data Quality Assessment
    • Purpose
      • This should be done at the beginning.
      • It basically refers to the level of confidence in the collected information about risks.
    • Questionnaire
      • Use of structured questionnaires to collect information that will assist with the recognition of the significant risks
    • Look for Trends
  • Risk Probability and Impact Assessment
    • Potential effect on one or more project objectives (schedule, cost, quality, performance, …)
    • Interviews
    • Meetings
    • Probability and Impact Scales
    • Assumptions Testing
  • Assessment of other risk parameters
    • Urgency
      • Risk urgency assessment
        • You rank the risks based on how soon in the project they are likely to happen.
        • You can use the project schedule to help you in this.
        • Urgent risks should be ranked higher than others.
    • Proximity
    • Dormancy
    • Manageability
    • Controllability
    • Detectability
    • Connectivity
    • Strategic impact
    • Propinquity
      • The degree to wich a risk is perceived to matter by one or more stakeholders.
• Interpersonal and team skills
  • Facilitation
• Risk categorization
  • Purpose
    • If you have many risks, say in the hundreds, you can use the RBS to group risks by source.
      • Thus, you can better rank them relative to each other.
      • Note, that I said “if”, meaning you have to option to use it.
      • Just emphasizing the fact that you don’t need to use all the tools.
  • Common root causes
  • Sources of risks
    • Risk Breakdown Structure (RBS)
      • The project manager encourages the project team to begin the grouping of identified risks by common causes.
      • The primary advantage to group risks by common causes during qualitative risk analysis can lead to further developing effective risk responses.
  • Affinity diagram
    • In an affinity diagram you categorize risks.
  • Useful categories
    • Project phases, project budget, roles and responsabilities, …
  • Areas of the project affected by risks
    • WBS
• Data representation
  • Probability and Impact Matrix
    • You use a matrix to assess your probabilities and impact.
      • The risk matrix is the main tool in risk qualitative analysis.
      • Probability and impact matrix is a tool and technique that helps you in ranking the identified risks.
      • You can invite stakeholders to a risk analysis meeting, give each one a copy of the risk matrix and go though each risk to assess its chances of occuring and effect on the project.
  • Hierarchical charts
    • Determining Risk Ranking within the Project
  • Project Risk Threshold
  • Project Risk Score
• Risk Meetings
  Go/No-Go Decision

Outputs

• The outcome of qualitative risk analysis is an update to the project document, which includes numerically assigning values to the project objectives regarding overall impact.
• Project document updates
  • Assumption log
  • Issue log
  • Risk register updates
    • Assessments of probability and impact for each individual risk
    • Priority level of risk score
      • Risk ranking for the project compared to other projects
    • Nominated risk owner
    • Risk urgency information
      • Urgent risks
    • Risk categorization
      • List of prioritized risks and their probability and impact ratings
        • List of ranked risks
        • List of the highest-ranking risks
        • Risks ranked based on their urgency
      • Risks grouped by categories
        • Risks grouped by their sources
      • List of risks requiring additional analysis in the near term
      • List of risks for additional analysis and response
    • Watch Lists
      • Watchlist (non-top risks)
        • List of risks with low impact on the project (watch list)
      • Watch list for low-priority risks
      • Watch list for risks requiring further analysis
    • Informations
      • Trends
      • Results of risk prioritization
  • Assumptions log updates
    • Chances are you made assumptions in your project because enough information weren’t available.
    • Such assumptions need to be updated.
    • Remember that assumptions are recorded in a separate log than Risk register.
  • Risk report
    • Most important individual risks
    • Prioritized list of all identified on the project
    • Summary conclusion
  • Go/no-go decision
    • Determine If you should proceed to the Perform Quantitative Risk Analysis Process or to the Plan Risk Responses Process
    • Proceed to the Perform Quantitative Risk Analysis process if
      • You believe that you have identified “all” project risks
      • It is worth the time and money on your project
      • You have a very high-priority or visible project
      • There is very little tolerance for cost or schedule overruns
    • Proceed to the Plan Risk Responses process if
      • You have a small budget or short length project
      • You are new to risk management and have not perfected quantitative risk analysis

Tricks

• Use a Chart
• Reducing Bias
• Document the Results
• Move Risky Activities Forward
• Move Common Causes of Risk Forward
• Show Risky Activities on the Network Diagram
• Note Path Convergence and Path Divergence
• Build Historical Records
• List the Activity Risk Score and Person Assigned on the BarChart

PMI-RMP Certification exam flashcards

Created : 20/05/2022