Identifying Risk Probability and Impact with Financial Amounts
Question
Your project has several risks that may cause serious financial impact should they happen.
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 for 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?
Answers
Explanations
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A. B. C. D.D.
The likely outcome of creating a chart that identifies the probability and impact of risk events with a financial amount for each event is B. Quantitative analysis.
Quantitative analysis is a process that involves assigning numerical values to risks and their impact on a project. The purpose of this analysis is to identify the most significant risks and determine the level of resources required to manage them. The result of this analysis is a quantitative risk management plan, which includes information on the probability of each risk, its impact, and the financial amount required to address it.
By creating a chart that identifies the risk probability and impact with a financial amount for each risk event, the project manager can effectively prioritize risks and allocate resources to address them. This chart provides a visual representation of the potential financial impact of each risk and can help management make informed decisions about which risks to address first.
A risk response plan is a document that outlines how risks will be managed and mitigated. While creating a chart can contribute to the development of a risk response plan, it is not the plan itself.
Risk response is the process of addressing risks once they have been identified. The chart created in this scenario can be used to inform risk response efforts, but it is not the risk response itself.
Contingency reserve is a sum of money set aside to cover unexpected costs that may arise during a project. While the chart created in this scenario can be used to inform contingency planning, it is not the contingency reserve itself.
