How to Perform Quantitative Risk Analysis for Projects
Performing Qualitative Risk Analysis for Project provides a method by which you can risk and prioritize risks. Effective Qualitative risk analysis can assist an organisation with the decision-making process when selecting which project to do and what resources are assigned to them.
Performing Quantitative Risk Analysis…
#1 Use Risk Register
First and foremost, there is a need for you to use a risk register to examine the list of identified risks. Do you need to ask some fundamental questions such as : All the risks identified? Are all the risks completely documented?
#2 Analyse Available Data
There is always a need for you to analyse the available data for each risk to assign data precision ranking score. Does the source of the data fully understand the risk? Is the source reliable and trustworthy? Is the amount of data sufficient to adequately analyse the data? Is there risk that requires further monitoring? Should they be placed in the risk register for security?
#3 Determine threshold
There is a need for you to determine the threshold for the project. The threshold has to do with the amount the Project Manager is allowed to spend without getting approval. As the Project Manager, you need to understand the risk threshold so that you will need to to know how far your Project stakeholder is ready to take risks.
#4 Analyse Assumptions
There is a need for you to also analyse the assumptions identified during risk identification potential risks against the validity of the assumption and the impact on the project. If false, use the help of an expert if necessary,
#5 Analyse Probability
There is a need for you to analyse the probability and impact of each identified risk using well-defined probability and impact scales of the project. This will allow prioritizing those risk based on the impact of the risk on the overall project.
#6 Risk factor score
Furthermore, you will need to determine the risk factor scores using a probability and impact matrix. Scoring the risk will allow you to understand the impact that such risk will have on the entire project. This will allow the Project Manager to prioritize those risks based on the impact of those risks.
#7 Prioritize the risk
You need to prioritize the risks according to the risk management plan. You need to identify risks that require further analysis. You have to determine the overall risk for the project and compare it with the organisational risk threshold.
#8 Document the Change
After you might have complete the quantitative risk analysis for your project, you will need to document the result in the risk register. This will allow you to keep monitoring the risks and update it as necessary. It will also allow you to keep stakeholders updated about the risk.
A typical example…
A fast-food company wants to reduce its long line and increase its hourly sales. the company discovers that by reducing the cooking time of Hamburger by 30 seconds, they could average 10 more customers served per hour.
The Shift Manager decided to perform a quantitative risk analysis to identify potential problems with this plan. Most of the risks they identified centred around food safety and were based on existing health and safety standards for the cooking of meat products. These regulations forced the restaurant chain’s risk threshold to be very low.
A Probability and impact matrix was created and each identified risk was scored on the Matrix. Highest in the ranking was the cook’s inability to guarantee consistency of internal food temperature based on a formula of cooking times.
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