Qualitative risk analysis is still valuable for a top-level, holistic view of your project’s risk. Projects are exposed to all sorts of risks and it’s impractical for project managers to deal with all of them. In many cases, the resources spent to mitigate a risk outweighs the benefits of addressing it.
In our latest guide, we offer an introduction to qualitative risk analysis that provides insight into the benefits and limitations of this style of risk analysis. While qualitative techniques offer more tangible and practical benefits, qualitative risk analysis can still be useful in certain situations.
Qualitative risk analysis allows you to prioritize risks based on their probability and impact so you can focus on treating the most significant risks.
This method also gives you a better idea of the main areas of risk exposure by categorizing risks by their source. This is important when it comes to prioritizing risk areas and treatment schedules.
Finally, qualitative risk analysis can improve your understanding of risks. Over time, you will discover much more than risk probability and consequences. You’ll discover trigger conditions, assumptions, and affected project elements. All of this helps build up a better picture of future projects.
What’s in the Guide?
Our introduction to qualitative risk analysis gives you a foundation in the basics. It includes:
- An explanation of risk analysis
- A comparison between qualitative and quantitative risk analysis
- Different types of risk analysis
- An explanation of risk appetite
- … and more!
Qualitative vs. Quantitative Risk Analysis
Qualitative risk analysis involves identifying risks, how likely they are to happen, and the potential impacts if they do. The results are typically shown using a Probability/Impact ranking matrix. This type of analysis will also categorize risks, either by source or effect.
Unlike quantitative risk analysis, which applies numerical values and uses verifiable data, qualitative risk analysis operates in a generalized, “big-picture” space. Quantitative risk analysis uses data to produce a value to measure the acceptability of a risk event outcome.
During a typical project, qualitative risk analysis will happen first. From there, risk managers can draw on data to address specific risks in more detail. So, while they do have two distinctions, they don’t compete for supremacy; they’re two parts of the larger risk management process.
Why is Qualitative Risk Analysis Important?
Qualitative risk analysis helps you identify risks that can have a significant impact on the project.
You can prioritize the efforts and resources in managing the risks in relation to the impact. This will help you allocate resources effectively, whether that’s time, money, or productivity.
Qualitative assessments are good for the initial stages of a project when there isn’t enough data to support numerical probability or consequence estimates.
In short, it allows you to judge risks ahead of time. Then, once you have enough data, you can make a more quantitative assessment of those risks.
Get an Introduction to Qualitative Risk Analysis
Risk management is all about the creation of a culture in which decisions are made based on the assessment of data in order to maximize opportunity and minimize the consequence of threats.
Qualitative risk management is a key component in the risk professionals’ tool kit.
It enables rapid prioritization of risks to help project teams to achieve their objectives. Through using these techniques your project will have a greater chance of being delivered on time and within budget.
For more information, check out our guide.