The essential number of distinct approaches related to risk analysis are:
Qualitative Risk Analysis:
- The qualitative risk analysis process is a project management technique that prioritizes risk on the project by assigning the probability and impact number. Probability is something a risk event will occur whereas impact is the significance of the consequences of a risk event.
- The objective of qualitative risk analysis is to assess and evaluate the characteristics of individually identified risk and then prioritize them based on the agreed-upon characteristics.
- The assessing individual risk evaluates the probability that each risk will occur and effect on the project objectives. The categorizing risks will help in filtering them out.
- Qualitative analysis is used to determine the risk exposure of the project by multiplying the probability and impact.
Quantitative Risk Analysis:
- The objectives of performing quantitative risk analysis process provide a numerical estimate of the overall effect of risk on the project objectives.
- It is used to evaluate the likelihood of success in achieving the project objectives and to estimate contingency reserve, usually applicable for time and cost.
- Quantitative analysis is not mandatory, especially for smaller projects. Quantitative risk analysis helps in calculating estimates of overall project risk which is the main focus.
