Qualitative vs. Quantitative Risk Analysis

2=Planning

In this blog post, we will explore the differences between qualitative and quantitative risk analysis. What is each? And when should you perform these processes? Let's dive in.

picture of qualitative and quantitative risk analysis

Qualitative Risk Analysis

Once you've identified your risks, it's important to evaluate your risks. Why? To establish the priorities of the risks. Which risks need a response?

Qualitative risk analysis is a quick way of determining the significance of your risks. One of the most common ways to perform qualitative risk analysis is the Probability / Impact Assessment. For example, we might evaluate the risk probability and impact on a scale of 1 to 5. If the probability was ranked as 4 and the impact was ranked as 3, we would multiply probability times the impact, giving us a risk score of 12.

"Qualitative risk analysis is the process of prioritizing individual project risks for further analysis or action by assessing their probability and impact as well as other characteristics."

- PMBOK 6th Edition -

More...

Quantitative Risk Analysis

So, what is quantitative risk analysis? This method is a numeric evaluation. For example, we might say that a risk has a 20% probability of occurring and if the risk occurs, there would be a $10,000 impact. Using the expected monetary value (EMV) method, we could multiply the probability times the impact, resulting in a $2,000 risk exposure.

"Quantitative risk analysis is process of numerically analyzing the combined effect of identified individual project risks and other sources of uncertainty on overall project objectives."

- PMBOK 6th Edition -

Qualitative vs. Quantitative Risk Analysis

What's the difference?

Qualitative Risk Analysis

  • Quick and easy  
  • Subjective
  • Always performed
  • Used to evaluate individual risks

Quantitative Risk Analysis

  • Requires more time  
  • Objective
  • Optional
  • Used to evaluate overall project risk
  • Provides more detailed information for go/no go decisions and response plans
  • Used to develop contingency reserves

Qualitative and Quantitative Risk Analysis: What's the Difference?

Conclusion:

When planning your programs and projects, be sure to develop a project risk management plan. And in this plan, specify how you will perform qualitative risks analysis. Furthermore, decide whether you will perform quantitative risk analysis. Is it worthwhile? Do the benefits outweigh the costs? If so, which tools and techniques will you and your team use?

Join the 21 Day Challenge

Risks derail projects. We make risk management easy to understand and practical to apply, putting you back in the driver's seat.

Spend five minutes per day for 21 days--discover practical risk management techniques that can help you turn uncertainty into success!

Plus, you'll get weekly project management tips.

Powered by ConvertKit

About the author 

Harry Hall

My name is Harry Hall and I'm the guy behind the projectriskcoach.com and the author of The Purpose Driven Project Manager. Risks can derail projects, resulting in challenged and sometimes failed projects. I make project risk management easy to understand and practical to apply, putting project managers in drivers seat.

You may also like

How to Create a Cause and Effect Diagram

Project Risks and Issues – What’s the Difference?

The What, Why, and How of Projects

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}