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In the last process 11.2 Identify Risks, individual project risks were identified, and in this process and the next one, these identified risks will be analyzed in two ways:   first qualitatively then quantitatively.

In the first qualitative analysis, you take the risk and assess its probability of occurrence and its impact on the project.   The key benefit is that it prioritizes risks so that you can focus the team’s efforts on high-priority risks.   The reason why this analysis is called qualitative is because it is based on the subjective perceptions of risk by the project team.

It is in the next process of quantitative risk analysis that the project team starts using objective measures in order to get a better handle on the magnitude of the individual risks involved.

So what are the inputs to this process?   Of course the project management plan, in particular the risk management plan component, will be used because it gives guidelines on how to do all of the risk management processes, including this one.   Project documents will be needed, the most obvious one being the risk register, but other documents may be consulted as well such as the assumption log (for both the key assumptions and constraints) and the stakeholder register (in order to assign possible risk owners).

11.3.1  Perform Qualitative Risk Analysis:  Inputs

11.3.1.1 Project Management Plan

As mentioned above, the risk management plan, one of the component plans of the overall project management plan, is an important input.   In particular, the following elements are of particular interest to this process.

• Roles and responsibilities–who is the lead of the risk management team and who are the team members?   Who will support the activities within the organization?  What are the specific responsibilities of each member of the team?
• Schedule–defines when and how often risk management processes will be performed throughout the project life cycle, and establishes those risk management activities that will be included into the project schedule., including those related to this process of qualitative risk analysis.
• Budget–gives the budget for risk management activities that will be included into the project budget, including those related to this process of qualitative risk analysis.
• Risk categories–a risk breakdown structure or RBS is a representation of potential sources of risk on a project.   Creating an RBS helps the project team consider the full range of sources from which individual project risks may arise.

• Definitions of risk probability and impact–used in this process 11.3 Perform Qualitative Risk Analysis, the probability and impact matrix divides these concepts into qualitative thresholds like “low”, “medium” and “high”.   The definition of these thresholds is important to establish at the beginning of the project.
• Stakeholder risk appetite–this should be expressed in terms of measurable risk thresholds around each project objective in order to determine the acceptable level of overall project risk exposure.

11.3.1.2   Project Documents

• Assumption log–this is the log you create to keep track of monitoring key assumptions and constraints that may affect the project.   High-level strategic and operational assumptions and constraints are identified in the business case (a document prepared by business analysts) and are listed in the project charter.   Lower-level assumptions related to individual activities and tasks are identified throughout the project, such as
  • Technical specifications
  • Estimates (for both cost and schedule)
• The risk register, the output of the last process 11.2 Identify Risks, will contain details of each identified individual project risk that will be assessed during the Perform Qualitative Risk Analysis process.   Details regarding the probability and impact of each individual risk will be added to the risk register as a result of this process.
• Stakeholder register–this will include details of project stakeholders who may be nominated as risk owners.   They will be consulted during this process to get their perceptions of the probability and impact of the risks they have been assigned.

11.3.1.3  Enterprise Environmental Factors

• Published material, including commercial risk databases or checklists, from similar projects.

11.3.1.4  Organizational Process Assets

• Information from similar completed projects done by the organization.

The next post will discuss the tools and techniques of this process.   Some are generic, that is, used in a lot of other processes as well, such as expert judgment, and interpersonal and team skills.   Some, such as the data gathering technique of interviews, are used in other processes.   The data analysis techniques of risk probability and impact assessment, however, is unique to this process.

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