Examining Qualitative Risk Analysis for Projects
Qualitative Risk Analysis is one of the major steps that you need to perform for your project. To do it, you need to identify risks and their characteristics. Qualitative Risk Analysis is when you rank risks and prioritize project risks according to their potential effect on project objectives.
I need to let you know that identifying risk is one part of an effective strategy to minimize work activity disrupting that could cause your project to go over budget or exceed it’s promised deadline.
You always need to rank project risks so that precious time is not wasted trying to navigate risks with low priority.
Qualitative risk analysis is also the foundation for effectively quantifying high priority risks in your project.
What then is Qualitative risk analysis?
It is the process of determining the probability of occurrence of and the impact of identified risk by using logical reasoning when numeric data is not readily available.
This is then used to determine the risk exposure of the project by multiplying the probability and the impact of such risk. The process ultimately provides the list of prioritized risks further actions.
A typical example…
An event management company was planning to organise a jazz concert in a coastal city. An initial market survey undertaken by the company indicates that the response to the concert will be good because of the general population of that city like jazz music. Also, historical data shows that the response toward a similar musical concert held in this city has been very encouraging.
However, a recent weather bureau announcement indicated that there is a slight possibility that a low-pressure area that developed beside the coastal city can cause heavy rain on the day of the concert.
The organising committee officials decide to have a discussion about the weather risk with all the stakeholders involved to evaluate the impact of the risk on the project objectives based on the scale of low, medium and high.
The members discussed the issue, list different areas of concern and rate them. The members find out that in the worst-case scenario, the low-pressure area over the coast may develop into a tropical storm, accompanied by very heavy rains and wind. But the chances of that are remote because the whether bulletin does not project a typical storm and indicate that there is only a slight possibility of heavy rains.
Secondly, some of the members are concerned that heavy rains may force people to stay indoors and reduce the incremental revenue from ticket sales at the box office on the day of the event, as well as from sales of souvenirs and concession at the event.
But on the contrary, others felt that because the concert is to be held inside an auditorium, the chance of rain having a big impact on the audience turnout is remote.
Also, even a seat occupying rate of 50percent would ensure that the expenditure involved with this event can be reclaimed.
Based on the deliberations, the organising committee finally concludes that the risk exposure is low or at the worst moderate in nature. The Event Manager documents the information in the risk register.
Now your take on this argument.
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