Risk Analysis Flashcards
Risk Analysis
The purpose of a risk analysis is to identify the internal and external risks associated with the proposed project in the application, rate the likelihood of the risks, rate the potential impact of the risks on the project, and identify actions that could help mitigate the risks.
Assess the likelihood (or frequency) of the risk occurring.
Estimate the potential impact if the risk were to occur. Consider both quantitative and qualitative costs.
Determine how the risk should be managed; decide what actions are necessary.
Qualitative risk analysis
involves identifying threats, 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.
quantitative risk analysis
As part of the overall quantitative risk management process, quantitative risk analysis is the process of calculating risk based on data gathered. The goal of quantitative risk analysis is to further specify how much will the impact of the risk cost the business. This is achieved by using what’s already known to predict or estimate an outcome.
For data to be suitable for quantitative risk analysis, it has to have been studied for a long period of time or to have been observed in multiple situations. For example, in the past five projects, equipment type A has broken down after 7 hours of use. With this information, it can be assumed that if a project requires workers to use equipment type A for 8 hours, then it has a 100% chance of breaking down.
difference between qualitative and quantitative risk analysis
The key difference between qualitative and quantitative risk analysis is the basis for evaluating risks. As mentioned earlier, qualitative risk analysis is based on a person’s perception or judgment while quantitative risk analysis is based on verified and specific data.
