Quantitative risk analysis – and how to perform it
Quantitative risk analysis assigns a projected value(usually this value is stated in terms of cost or time) to the risks that have already being ranked by the previous process ‘perform qualitative risk analysis’.
People often confuse these two processes which are normally performed at the same time. Perform quality of risk analysis however is determining the probability and impact of the risks to the project and going on to prioritize and rank them on the risk register. The outputs from this process will be used to plan risk responses and also to monitor and control risks.
The risk management plan. This document is in fact the risk management strategy because it defines the level of risk which is seen as tolerable, how such risks will be managed, who will be responsible for carrying out the risk activities, the time and cost aspects of each risk activity and how the communication of risk is to occur.
Schedule management plan. Because the schedule timings are presented in a quantifiable manner then risks concerned with timing and time scales can easily be quantified within this process.
Cost management plan. Similar to the above, costs are also quantifiable and can be used as an input for this process. Note that the scope management plan is not quantifiable and is therefore normally used within the qualitative risk analysis process.
Organizational process assets. These may consist of risk templates, policies procedures or guidelines, lessons learned from previous or similar projects, and any quantitative risk tools.
Quantitative risk analysis assigns a projected value(usually this value is stated in terms of cost or time) to the risks that have already being ranked by the previous process ‘perform qualitative risk analysis’.
People often confuse these two processes which are normally performed at the same time. Perform quality of risk analysis however is determining the probability and impact of the risks to the project and going on to prioritize and rank them on the risk register. The outputs from this process will be used to plan risk responses and also to monitor and control risks.
There are five inputs to perform quantitative risk analysis:
The risk register. This contains a list of all of the identify risks so far on the project, and includes information on each such as their responses, their records is an categories.The risk management plan. This document is in fact the risk management strategy because it defines the level of risk which is seen as tolerable, how such risks will be managed, who will be responsible for carrying out the risk activities, the time and cost aspects of each risk activity and how the communication of risk is to occur.
Schedule management plan. Because the schedule timings are presented in a quantifiable manner then risks concerned with timing and time scales can easily be quantified within this process.
Cost management plan. Similar to the above, costs are also quantifiable and can be used as an input for this process. Note that the scope management plan is not quantifiable and is therefore normally used within the qualitative risk analysis process.
Organizational process assets. These may consist of risk templates, policies procedures or guidelines, lessons learned from previous or similar projects, and any quantitative risk tools.
