a. Identify Risks
b. Evaluate Risks using Quantitative & Qualitative Risk Analysis
c. Prioritize Risks
d. Establish Control Limits
In order to plan effectively for the risks, we need to first analyze them properly. The Risk Analysis domain gives us all the inputs we need in order to plan the risk responses for the event that the risk occurs.
Logically thinking, it makes a lot of sense to spend our time and effort on risks that have the highest probability of occurring or on risks that have the highest potential impact on our project. Doesn’t it?
How will we identify which risk has a higher probability or a higher impact when compared to others? This is exactly what the Quantitative & Qualitative Analysis aspects of Risk Analysis will help us with. Before we begin our analysis, we need to identify all possible risks that may occur. By analyzing these risks and by understanding our stakeholder risk tolerance levels, we can shortlist and arrive at the important (or high priority) risks that we need to concentrate on…
You might be wondering what this “Establish Control Limits” objective is doing in the Risk Analysis domain. Are you? Setting these control limits is also part of the Risk Analysis Domain. We set these control limits by analyzing the risk tolerance levels of our stakeholders. The Project Management Team will use these limits to monitor the risks and to implement the planned responses. So, it makes perfect sense to include this objective as part of this domain…
In order to conduct an efficient Risk Analysis we need:
1. Good Information Gathering Techniques
2. Ability to Understand and Utilize Historic Information
3. Tools and Techniques to perform Qualitative Analysis
4. Tools and Techniques to perform Quantitative Analysis
5. Good Decision Making Capabilities
6. Ability to Perform Stakeholder Sensitivity Analysis
If all these things are not too clear and are making you nervous, don’t worry… This is just the initial introduction chapter. We will be covering the Risk Analysis Domain in great detail until you understand it clearly.
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