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Project Risk Management: Prioritizing Risks

Compare and contrast quantitative versus qualitative analysis and discuss two situations that warrant only the use of qualitative analysis.

Defining the severity of a risk is essential for enhancing the project viability and addressing the possible issues in a timely and efficient fashion. Consequently, the application of the appropriate risk analysis techniques should be considered when developing a project. Traditionally, qualitative and quantitative risk evaluation strategies are identified (Jenson, 2012). Although the latter allows for quantifying the analysis results and, therefore, making very specific forecasts, the former helps locate the relations between the factors causing risks to occur; therefore, the choice of a risk analysis strategy should be made on a case-by-case basis so that the existing and emerging risks could be managed correspondingly.

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As a rule, the adoption of a qualitative risk analysis is required in the cases that do not involve the use of any statistical data whatsoever. In other words, the analysis of qualitative information is the primary goal of the above-mentioned process. In contrast to the quantitative risk analysis strategies, the given tools allow for determining the origin of the risks under analysis. Particularly, the risks are categorized as either source-based or effect-based ones (Hillson & Simon, 2014). The quantitative analysis tools, in their turn, help evaluate the extent to which external and internal factors are going to affect the project.

Even though the use of quantitative tools might seem essential for every single project, some situations require the application of qualitative tools only. For instance, the scenario that requires very fast risk identification and faces significant time constraints needs a qualitative analysis. Compared to the quantitative one, a qualitative study of the significant risk factors takes a considerably smaller amount of time and provides the results that can be used to address temporary issues (Sanghera, 2014).

Qualitative risks are typically categorized by a group of experts to determine the probability and the impact to project objectives. Consider the next steps you would take as a project manager to assemble a group of experts to participate. Who would you select and why?

After the project risk assessment team is assembled, the taxonomy of risks will have to be established. Particularly, the people participating in the evaluation will have to identify the significant characteristics of the risks that the main project is under and consider their severity on a certain scale (e.g., a scale from one to ten). Therefore, apart from categorizing the existing risks, the project management team will have to consider the scale mentioned above. Particularly, the measurement process will have to be considered.

Selecting a group of people, who will evaluate the existing quantitative risks one will have to consider the members of the project first. By choosing the representatives of different project departments, one will be able to locate the risks related to various areas, such as finances, R&D, promotion, etc. (Wingate, 2014). It will be required to locate the scale to be used for assessing the risks, splitting it into the corresponding units, and assigning each unit with a certain value.

After the scale has been developed and the existing risks are aligned by their severity, the quantitative analysis will have to be carried out. The above-mentioned analysis has to be conducted with the help of proper tools, such as SPSS (Jenson, 2012).

Evaluating the risks that a project may be subjected to in the course of its implementation requires the adoption of both quantitative and qualitative assessment tools. Since the factors that define the amount and severity of project risk are numerous and, more importantly, quite versatile, their analysis requires different approaches. Hence, a project manager has to incorporate qualitative and quantitative tools in the process of risk analysis. It is only with the adoption of the specified mixed approach that project risks can be reduced.

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Reference List

Hillson, D. & Simon, P. (2014). Practical project risk management: The ATOM methodology. Tysons Corner, Virginia: Management Concepts, Inc.

Jenson, J. M. (2012). Risk, resilience, and positive youth development: Developing effective community programs for at-risk youth: Lessons from the Denver Bridge Project. New York City, New York: OUP USA.

Sanghera, P. (2014). CAPM in depth: certified associate in project management study guide for the CAPM exam. Stamford, Connecticut: Cengage Learning.

Wingate, L. M. (2014). Project management for research and development: Guiding innovation for positive R&D outcomes. Roca Baton, Florida: CRC Press.

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