Gary is the project manager for his project.
He and the project team have completed the qualitative risk analysis process and are about to enter the quantitative risk analysis process when Mary, the project sponsor, wants to know what quantitative risk analysis will review.
Which of the following statements best defines what quantitative risk analysis will review?
Click on the arrows to vote for the correct answer
A. B. C. D.D.
Quantitative risk analysis is the process of numerically analyzing the effect of identified risks on project objectives. It involves assessing and prioritizing risks based on their probability of occurrence, the potential impact of each risk event, and the cost of each risk event if it were to occur. This process is typically conducted after qualitative risk analysis, which involves identifying and prioritizing risks based on their likelihood and potential impact.
Answer A is incorrect because quantitative risk analysis does not determine the "true cost" of each identified risk event. Instead, it calculates the expected monetary value (EMV) of each risk event, which is the product of the probability of occurrence and the cost of the event. This provides a better understanding of the potential financial impact of each risk event.
Answer B is partially correct because the quantitative risk analysis process does review risk events for their probability and impact on project objectives. However, it does not only review risk events for these factors. Quantitative risk analysis also considers other factors, such as the cost of the risk event and the overall risk exposure of the project.
Answer C is incorrect because the quantitative risk analysis process does not review the results of risk identification. Instead, it builds upon the results of qualitative risk analysis by providing a more detailed analysis of the risks that were identified.
Answer D is incorrect because the quantitative risk analysis process does not analyze the effect of risk events that may "substantially impact the project's competing demands." Instead, it analyzes the effect of all identified risks on the project's objectives and provides information to support risk response planning.
In summary, the best definition of what quantitative risk analysis will review is that it will numerically analyze the effect of identified risks on project objectives, taking into account the probability, impact, and cost of each risk event. It builds upon the results of qualitative risk analysis and provides information to support risk response planning.