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?
Click on the arrows to vote for the correct answer
A. B. C. D.C.
The likely outcome of creating a chart that identifies the risk probability and impact with a financial amount for each risk event is a quantitative analysis.
Quantitative analysis is a risk management technique that involves the numerical calculation of potential risk events to determine the overall risk exposure to an organization. It helps organizations to identify, analyze, and prioritize risks based on their likelihood of occurrence, potential impact, and financial cost.
The chart that identifies risk probability and impact with a financial amount can be used to calculate the overall risk exposure of the project, and this information can be used to make informed decisions about the level of risk that the organization is willing to accept. The chart can also be used to identify high-risk areas that require additional risk responses or mitigation strategies.
Once the chart has been created, the risk response plan can be developed based on the results of the quantitative analysis. The risk response plan is a documented strategy that outlines the actions that will be taken to respond to identified risks. It includes the identification of risk owners, risk response strategies, and contingency plans.
The chart can also be used to identify the contingency reserve. A contingency reserve is an amount of money set aside to cover unexpected costs or losses that may arise due to risk events. The contingency reserve is typically calculated as a percentage of the total project budget based on the level of risk exposure.
In summary, creating a chart that identifies risk probability and impact with a financial amount for each risk event is a key step in conducting a quantitative analysis. The results of the analysis can be used to develop a risk response plan, identify the contingency reserve, and make informed decisions about the level of risk that the organization is willing to accept.