PMI RMP – PERFORM QUALITATIVE RISK ANALYSIS Part 2

4. RISK SCORE CALCULATIONS

Hi and welcome back again. So in this lecture we are going to talk about the risk score calculations and keep in mind that the majority of the risk analysis calculations, math formulas will be used in the quantitative risk analysis process and in the planned risk responses process. We have three you lightweight calculations done here for the risk score purposes. Now, in performing qualitative risk analysis, we aim to rank the risks within a project in order to prepare the prioritized list of risks. It is done through the calculation of the risk score of each risk using the probability and impact ratings. So why we are going to calculate the risk score? Because we want to prioritize the risks within the qualitative risk analysis.

This is one of the outputs of the qualitative risk analysis process to have a list of prioritized risks. So how I’m going to prioritize these risks, I want to find out the risk score of each listed risk. The risk score equals the probability rating from the Pi matrix multiplied by the impact rating from the impact matrix. In order to calculate the risk score, the probability and impact matrix, the Pi matrix should be completed earlier without the Pi matrix, without a defined probability and impact ratings, you cannot find out the risk score. The project risk score is the sum of individual risk scores of the project and then divide that sum by the number of risks.

So in order to find out the risk score for an individual risk, you just need to multiply the rating of the probability by the rating of the impact. To find out the risk score for the whole project, you need to do the sum of the individual risk scores and divide it by the number of risks. Risk score can give you an indication of risk severity. For the purpose of ranking only, quantitative analysis will give you the exact numerical amount of risks severity. I’m going to explain this as a part of the quantitative risk analysis under the expected monetary value formula.

Now, for the example I’m going to solve, I want to use this probability scale Arise with a probability rating of six means high, eight means very high, four means moderate, low, one means very low, and so on. For the impact scale, I’ll use this scale from one to 10 arrest with an impact scale of three means slightly over budget with four slightly delayed and so on. So the first example referred to the previous charts complete the following table. We have four activities, each with a probability and impact description or interpretation.

Let’s take for example risk B. Risk B probability is very low. So if I want to refer back to the impact scale with a very low, I will give it a rating of one. For rest B there is no serious impact. No serious impact will give you also a one rating. So it’s one by one for rest B. And this is what you are going to do for the old four activities. In order to have 2. 5 x eight, we’ll give you a score of 20 for risk A. For B. We just calculated it, it’s one for C, it’s four by three, it’s twelve for D, it’s eight by four, it’s 32. So how I’m going to prioritize these four risks? Number one with the highest priority will be risk D. Then we will have risk A with 20, then risk C with twelve and then risk D with one.

Another example here you have the following table of risks in your project. Which one is the risk? Which will be the team biggest concern? So we have four risks here A-B-C and D, each with a given probability and impact description. There are no ratings given in the question. So we are going to assume the ratings on a scale from one to five. This is what I use. You can use scale from one to 100, from one to ten. That will be your choice for me. Now, the very high will have a five value. High will have a four medium three, low two and very low one. By applying the risk score formula P by I, I will have a risk score of four for risk A, three for risk B to 20 for risk C and 15 for rest D. So the high highest risk score will be risk C and it will be the team’s biggest concert. This is all for the risk score. Thank you so much. I will see you at the next lecture.

5. OUTPUTS

Hi and we’ll come back again. What are the outputs of the performing qualitative risk analysis process? We have only one output project documents update what are the project documents which can be updated as a result of the qualitative analysis? Updated with the new assumptions, the assumption look, if we make any assumptions in this process, we will document these assumptions as a part of the assumption lock. The issue lock should be updated to capture any new issues uncovered or changes in currently logged issues. The risk register updated with the new information generated during the performed qualitative risk analysis process. This is the primary output. What are the updates of the risk register as a result of the qualitative risk analysis process? I’m going to list all of them in the following slide. The last document which might be updated is the risk report, updated to reflect the project highest ranking individual risks.

Now what are the updates? The new information that will be added to the risk register at this point of time? First of all, we will have the risk ranking of the project compared to other projects as a result of the qualitative risk analysis. There will be a number to be used to the rank of the project in comparison to other projects within the organization. So this is the first output, the first result of the qualitative risk analysis. We can rank our project regarding rest comparing this project to other projects. We will have also a list of prioritized risks and their probability and impact ratings. We will have the risks grouped by categories and this will help us at the planet’s response to the process.

To know, we should focus on which category list of risks requiring additional analysis in the near term. List of risks for additional analysis and response. These are the risks that will move forward into quantitative risk analysis and or response planning. The watch list or the nonstop risks. These risks are documented for later review during the monitor project risk.

All the risks that will be documented in the watch list will not be processed through the quantitative risk analysis process or the plan responses. It will be documented for further review of the monitor risks process. So these are the six new updates of the risk register as a result of the qualitative risk analysis process. This is an important topic for the exam. Again and again you need to be aware of all the updates on the risk register done at the end of each process. This is all for the outputs. Thank you so much. I will see you at the next lecture.

6. STEPS TO FOLLOW IN PERFORM QUALITATIVE RISK ANALYSIS

Hi and welcome back again. So what are the steps to follow while performing the qualitative risk analysis process? We need to collect additional information you may need in order to evaluate and assess the project risks. This is the first step to do. Then you need to determine if you will use the risk owners now to help with qualifying risk on only or only assignments owners later during the planet’s responses process. This decision is made by preference depending on the number of risks identified and how familiar the risk team is with the risks identified.

Keep in mind that assigning the risk owner will be as a part of the plan risk responsive process. Meanwhile, you can assign fewest owners depending on the project size and the identified risks. The third step is to look for and test any assumption made in qualifying risks and look for any data that is biased. We want to reduce bias during the qualitative analysis. Determine what skills of probability and impact to use and what methods of qualitative risk analysis to use, how they will be used, and who will be involved in this process.

Determine probability, impact limits and timing for each risk. Determine which risks activities and causes you will move forward in the risk management processes. Then you need to determine the overall risk score of the project and the ranking of the project compared to other projects. Document all the risks. Look for trends and qualitative risk analysis. It’s the time to make go no go decisions about the project. Depending on the risk ranking of the project. At the end you will move to the performance quantitative risk analysis or directly into the plan risk responses process. This will depend on the list of prioritized risks you have. This is all for the steps to follow. Thank you so much. I will see at the next lecture.

7. SUMMARY

Hi and welcome back again. So as a summary of the performing qualitative risk analysis process, it involves taking an initial look at the identified risks to determine the top risks that you will quantify further and or address in the plan risk responses. This is what we are going to do in this process. The probability and impact of risks are sub objectively determined. They will be objectively determined in the following process. An important part of this process is to assess the quality and thrilling ability of the information you are working with. The risk ranking of the individual risks as compared to all other risks on the project is determined.

The risk ranking of the project as compared to other projects is determined as a part of the qualitative analysis. For the exam, here are few terms which you need to memorize what’s the performing qualitative risk analysis of process? What’s the assumptions? Testing the data quality assessment, the Pi skills, the common causes of the risks? What is the go no go decision? The list of risks to move forward watch list what’s the path convergence? The motivational and cognitive by assets, risk creating, risk ranking, risk score, project risk ranking and project risk score. This is all for the qualitative risk analysis process. Thank you so much. I see you after the quiz.