Beruflich Dokumente
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risk analysis
submitted by
SVKM’S NMIMS
School of Business Management, Hyderabad
PGDM 2016-18
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 prioritise 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.
With this in mind the risk register is updated as a result of Quantitative risk analysis in
terms of its risk and probability along with the priority of each risk plus any trends that
have been observed.
Tools used in Quantitative risk analysis:
Probability distributions.
These are usually presented on my table or graph and represent mathematically the
probability of a risk events occurring. These probability distributions aid decision-making
by considering the real probability of it happening and using this determine the best way
to approach each risk.
Rather than ask each expert for a single value for each, the project manager would
normally encourage each experts to provide an optimistic, pessimistic and realistic
probability and impact value for each risk.
Quantitative risk analysis and modelling techniques.
There are five tools and methods that can be used here:
Sensitivity analysis.
This involves analysing the project to determine how sensitive is to particular risks by
analysing the impact and severity of each risk.
Tornado diagrams.
These are named because of their funnel shaped and portray graphically the project
sensitivity to cost or other factors. Each tornado diagram will represent the impact of
risks in terms of particular aspects. These aspects may be the stages of phases of all
project, and are ranked vertically and represented by a horizontal bar showing plus or
minus cost impacts.