Your project has several risks that may cause serious financial impact if they occur.
You have studied the risk events and made some potential risk responses for the risk events but management wants you to do more.
They'd like you to create some type of a chart that identified the risk probability and impact with a financial amount for each risk event.
What is the likely outcome of creating this type of chart?
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A. B. C. D.B.
This chart is a probability-impact matrix in a quantitative analysis process.
The probability and financial impact of each risk is learned through research, testing, and subject matter experts.
The probability of the event is multiplied by the financial impact to create a risk event value for each risk.
The sum of the risk event values will lead to the contingency reserve for the project.
Incorrect Answers: A: The risk response plan is based on the risk responses, not the risk probability-impact matrix.
C: The risk responses are needed but this chart doesn't help the project manager to create them.
D: This chart is created as part of quantitative analysis.
The likely outcome of creating a chart that identifies risk probability, impact, and financial amount for each risk event is quantitative analysis. This type of analysis is used to provide a numerical estimate of the potential impact of each risk on the project's objectives, such as cost, schedule, or scope. It involves using statistical and mathematical methods to analyze data and calculate the probability and financial impact of each risk event.
The chart that management is asking for is a risk matrix or a risk heat map. A risk matrix is a graphical representation of the likelihood of a risk occurring and the severity of its impact on the project. The matrix typically uses a color-coded system to display the risk probability and impact, such as low, medium, and high. The risk heat map, on the other hand, provides a visual representation of the risk distribution across the project.
By creating a risk matrix or heat map, the project team can prioritize their risk responses and allocate resources accordingly. The matrix will help the team to identify the high-risk areas of the project and to develop strategies to mitigate or eliminate those risks. The financial amount assigned to each risk event will help the team to determine the potential financial impact of each risk and to set aside a contingency reserve to address those risks.
In summary, the likely outcome of creating a chart that identifies the risk probability, impact, and financial amount for each risk event is quantitative analysis. The chart will provide a visual representation of the project risks and help the team to prioritize their risk responses and allocate resources accordingly.