What will an organization evaluate when performing a qualitative risk analysis?
Setting priorities and determining action plans related to risks is crucial to your success as a project manager and the overall health of your projects. Performing qualitative risk analysis is one PMP exam process that can help you evaluate risks and assess where your time and effort are most needed. Here at Project Management Academy, we understand how important it is to understand qualitative risk analysis for the PMP exam and general project risk management. In this guide, you will learn about qualitative risk analysis and how to perform it for the PMP Exam. Show
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Get Your Comprehensive Guide to Risk Management Learn how to manage risk in every project. What is Qualitative Risk Analysis and How to Perform this PMP ProcessPerforming qualitative risk analysis is an essential step in project risk management. During this process, project managers will prioritize risks by assessing their probability and impact. All projects come with positive and negative risks, also known as opportunities and threats. However, due to resource limitations, you most likely won’t be able to spend effort on every risk. Qualitative risk analysis allows you to identify urgent risks that require attention while reducing the level of overall uncertainty in the project. When and how to use qualitative risk analysis in projectsYou should perform qualitative risk analysis early on in your project. Doing so allows you to prepare for and prioritize various project risks by understanding how likely they are to happen, how they could affect the project, and what you should do to prevent threats and capitalize on opportunities. However, as with risk identification and other risk management activities, qualitative risk analysis should occur throughout your project. Risks can come and go during your project’s life cycle, and their severity may also change over time. Inputs required to perform qualitative risk analysis PMPYou should use multiple inputs to inform your qualitative risk analysis. These inputs fall under four categories: project management plan, project documents, enterprise environmental factors, and organizational process assets. Project management plan inputs can include the following:
Project documents that can contribute to qualitative risk analysis can include:
Enterprise environmental factors (EEFs) include organizational culture, marketplace conditions, the geographic distribution of facilities and resources, and legislation. EEFs occur both within and outside your project team and organization. Assessing EEFs can help you identify more risks and determine how urgent they are. Some examples of EEFs include:
Organizational process assets include any information your organization has already acquired or established, such as information from past projects. OPAs are plans, processes, policies, procedures, and knowledge bases specific to and used by the performing organization. Things like internal policies on hiring contractors or employees, PMO templates for cost, schedule, or scope baselines, or your company’s Lessons Learned Repository would be included here. The input of performing a qualitative risk analysisWhat does qualitative risk analysis feed or drive in the project risk management process? After performing qualitative risk analysis, you will have updates for various documents, such as your assumptions log, risk register, risk report, and more. Entering the results from your qualitative risk analysis into these documents will help you prepare in case a risk event occurs. Perform Qualitative Risk Analysis: Inputs, Tools and Techniques, and OutputsEach time you reassess and reprioritize project risks, you should also update the relevant project team members with the latest information. This step will keep everyone on the same page regarding what risks to keep an eye on and who is in charge of various risk responses. You should know the following tools and techniques related to qualitative risk analysis for the PMP exam and performing qualitative risk analysis for your projects:
You may be asked to identify how to use these tools or techniques for the PMP exam, so you should be familiar with them and how they relate to this process. Studying for the PMP Exam? Perform Qualitative vs Quantitative Risk Analysis for the PMP ExamWhile qualitative and quantitative risk analyses share some similarities and can often be performed in tandem, you should understand what sets them apart, especially as you work through PMP prep work for the exam. Similarities between qualitative and quantitative risk analysisQualitative and quantitative risk analysis both fall within the project risk management knowledge area. Each process involves evaluating the probability and impact of various project risks. As a result of both types of risk analysis, you can update your risk report, risk register, and other documents with relevant information. Difference between qualitative and quantitative risk analysisQuantitative risk analysis has more limited use cases than qualitative risk analysis. Here are some other differences between qualitative and quantitative risk analysis: Qualitative risk analysis:
Quantitative risk analysis:
Since quantitative risk analysis requires a deeper dive using measurable data, whether you can perform it will depend on the project type, risks, and data available. In contrast, you can and should always perform qualitative risk analysis throughout every project. SummaryWhen it comes to studying for the PMP exam, you should at a minimum focus on the most critical content areas for performing qualitative risk analysis: You may encounter questions that will present some information or a hypothetical project situation and you will need to be able to determine how your project might be affected. Qualitative risk analysis is a critical process to understand for the PMP exam and to improve your work as a project manager. Learn more about project risk management or sign up for a training course with the experts at Project Management Academy. Upcoming PMP Certification Training – Live & Online Classes
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Erin Aldridge, PMP, PMI-ACP, & CSPOWhat are the two main criteria used when evaluating qualitative risk analysis?When you use qualitative risk analysis you should evaluate each risk and designate each risk as high, medium, or low, depending on two criteria--the severity of impact and the probability of the event occurring. Here's how to do it. analysis techniques.
What is the objective of the qualitative risk analysis?Qualitative risk analysis is the process of assessing individual project risk probability of occurrence and impact against a pre-defined scale. The purposes of qualitative risk analysis are to prioritize risks, improve risk understanding, and identify the main risk exposure areas.
What is the qualitative approach to risk assessment?Qualitative risk assessment is the process of analyzing risk occurring and the impact it would have on a project. It helps project managers prioritize risk according to probability and impact while identifying the main areas of risk exposure and improving understanding of project risks.
When would you use qualitative risk analysis?2. When Should You Do Qualitative Risk Analysis? Always. Qualitative Risk Analysis is necessary after risk factors have been identified.
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