The document discusses qualitative and quantitative risk analysis methods in project risk management. It defines risk and describes qualitative analysis which involves assessing probability and impact through a risk matrix. Quantitative analysis numerically analyzes risk impact through tools like probability distributions, sensitivity analysis, and modeling. It provides examples of qualitative versus quantitative analysis and how qualitative analysis leads to quantitative analysis by identifying risks with the greatest effects. The overall process of risk management is also summarized.

1. Qualitative and
Quantitative
Risk Analysis –
PMP® Prep Topic
Saket Bansal
PMP is a registered trademark of the Project Management Institute, Inc.
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2. Agenda
About Risk
Project Risk
Management
Qualitative Risk
Analysis
Quantitative Risk
Analysis
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3. Risk
" Project risk is an uncertain event or condition that, if it occurs,
as a positive or negative effect on one or more project
objectives such as scope, schedule, cost, and quality. "
- PMBOK® Guide Fifth Edition
Uncertain
Risk
Impact
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4. Risk appetitte , tolerance and threshold
Risk
Appetite
We take high
risks.
Risk
Tolerance
We can take risk
of up to 100,000
USD
Risk
Threshold
We can not take risk
of 200,000 USD
with 50% Probability
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5. Project Risk Management
Control
Risks
Plan Risk
Management
Plan Risk
Response
Identify
Risks
Perform
Quantitative
Risk Analysis
Perform
Qualitative
Risk Analysis
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6. Identify Risks
If CAUSE exists, EVENT may occur leading to EFFECT
Risk
Description
Potential
Cause
Risk Priority
Risk
Category
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Risk Impact

7. Risk Analysis
I need to prioritize risks
so that I can take care
of high impact items
first
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8. Qualitative Risk Analysis
Risk Ranking
Qualitative Risk
Analysis
Probability and Impact
Mark for further
Analysis
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Watch list

9. How to do Qualitative Risk Assesment
Perform
probability and
impact
assessment
Risk Data Quality
Assessment
Check the
definition of
probability
and impact
Risk Categorizations
Use Probability
and Impact
Matrix to
calculate the
risk exposure
Risk Urgency
Assessment
Expert Judgment
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Update Risk
Register

10. Quantitative Risk Analysis
Perform Quantitative Risk Analysis is the process of numerically analyzing the
effect of identified risks on overall project objectives.
- PMBOK ® Guide Fifth Edition
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11. Numercial Analysis Provides
Probabilistic
Analysis
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12. Quantitative Risk Analysis Tools
•
•
•
•
•
•
Inteviewing
Probability distributions
Sensitivity analysis
Expected Monetory Value Analysis
Modeling and Simulation
Expert Judgement
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13. Qualitative vs Quantitaitve Risk Analysis
Qualitative
Addresses individual risks
descriptively
Example :
Extension of winter season may
cause delay in deliverable
validation
Quantitative
Predicts likely project outcomes
based on combined effects of risks
Example:
There is 50% probability of
completing the project in 500,000
USD
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14. Qualitative vs Quantitaitve Risk Analysis
Qualitative
Quantitative
•Uses probability distributions to
characterize the risk’s probability
and impact
Assesses the discreet probability of
occurrence and impact on objective
if it does occur
•Uses project model (e.g.
Schedule, cost estimate)
•Estimates the likelihood of
meeting targets and contingency
needed to achieve desired level
of comfort
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15. Qualitative vs Quantitaitve Risk Analysis
Qualitative
Leads to quantitative risk
analysis
Quantitative
Identifies risks with greatest
effects on overall project
risk
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16. What Next ?
Control
Risks
Plan Risk
Management
Plan Risk
Response
Identify
Risks
Perform
Quantitative
Risk Analysis
Perform
Qualitative
Risk Analysis
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17. Stay Connected
Contact Us
Saket.Bansal@iZenBridge.com
www.iZenBridge.com
PMP® / PMI-ACP®
Discussion Forum
Youtube Channel
www.youtube.com/izenbridge
forum.izenbridge.com
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