Setting priorities and determining action plans related to risks is crucial to your success as a project manager and the overall health of your projects. Performing qualitative risk analysis is one PMP® exam process that can help you evaluate risks and assess where your time and effort are most needed.
Here at Project Management Academy, we understand how important it is to understand qualitative risk analysis for the PMP® Exam and general project risk management.In this guide, you will learn about qualitative risk analysis and how to perform it for the PMP Exam.
What is Qualitative Risk Analysis and How to Perform this PMP® Process
Projects need to follow established processes that ensure success. This includes risk analysis, which analyzes the probability and impact of risks.
Positive and negative risks are opportunities and threats, also known as "opportunities" and "threats." However, due to resource limitations, you most likely won't be able to spend effort on every risk. Quantitative-focused risk analysis allows you to identify urgent risks that require attention while reducing the level of overall uncertainty in your project.
When and how to use qualitative risk analysis in projects
You should perform qualitative risk analysis before your project. Doing so helps you prepare for and prioritize various risks by understanding how likely they are to happen, what effects they will have on the project, and what you should do to prevent threats and capitalize on opportunities.
Qualitative risk analysis is important throughout the project life cycle. You should consider risks not just at certain points in the project, but also as they come up during the process.
Inputs required to perform qualitative risk analysis PMP®
You should use a variety of inputs to inform your qualitative risk assessment. These inputs include project management plan, project documents, enterprise environmental factors, and organizational process assets.
Project management plan inputs can include the following:
Your company can learn how to effectively manage risks. Our risk management plan will guide you through this process and help you improve your project's success rate.
A cost management plan can help you be more efficient. A plan helps you understand how to avoid project risks and get better results.
We help you understand the schedule and identify risks. We also make it easy for you to track the progress of your project throughout its life cycle for more efficient management.
Scope baseline: this is the approved project scope statement and work breakdown structure. This is a tool you can use to help prioritize risks or reassess them if your actual project progress differs from your planned results.
Project documents that can contribute to qualitative risk analysis can include:
Project risk register: used to track and report on project risks. You can use the Project Risk Register to document priority levels for risks and organize any other relevant information identified.
Assumption log is a list of assumptions made related to your project. Making too many assumptions or assumptions on bad information can complicate risk identification and other activities.
Develop a project register: a directory of project-related individuals whose risk tolerances, appetite, and opinions you should consider. Understanding your project register may also uncover sources of bias to help you assess risks more objectively.
Environmental factors include organizational culture, marketplace conditions, the geographic distribution of facilities and resources, and legislation. They should be constantly assessed to help ensure that your project runs smoothly. Some examples of environmental factors include:
Industry studies
Commercial risk databases
Product, quality, and government standards
Current events
The process assets include any information your organization has already acquired or established, such as information from past projects. Process assets are plans, processes, policies, procedures, and knowledge bases specific to and used by the performing organization. For example, internal policies on hiring contractors or employees, PMO templates for cost, schedule, or scope baselines or your.
The input of performing a qualitative risk analysis
After performing a qualitative risk analysis, you will have updates for various documents, such as your assumptions log, risk register, risk report, and more. You can enter the results from your qualitative risk analysis into these documents to help you prepare in case a risk event occurs.
Perform Qualitative Risk Analysis: Inputs, Tools and Techniques, and Outputs
Each time you reassess and reprioritize project risks, you should also update the relevant project team members with the latest information. This step will keep everyone on the same page regarding what risks to keep an eye on and who is in charge of various risk responses.
Tools and techniques for qualitative risk analysis
You should know the following tools and techniques related to qualitative risk analysis for the PMP® exam and performing qualitative risk analysis for your projects:
Expert judgment
Data gathering, interviews, and meetings
Data analysis:
Risk data quality assessments
Risk probability and impact assessment
Interpersonal and team skills
Risk categorization using the risk breakdown structure
Data representation:
Probability and impact matrix
Bubble charts or other hierarchical outputs
Risk register
You may be asked to identify how to use these tools or techniques for the PMP® exam, so you should be familiar with them and how they relate to this process.