Risk Probability and Impact Assessment

Risk is calculated based on two values probability and impact. Probability is the likely hood of an occurrence of a risk and the impact is what can be the effect if risk occurs on any project objectives like cost, time, quality, scope, etc… The impact can be positive or negative. If positive make it as an opportunity and if it is negative it is threat. The project manager should increase the impact if it is opportunity and should reduce the impact if it is negative.

Once you identify the risks we can’t address all the risks with same priority. One needs to assess the probability and Impact by using the scaling. For example probability with >80% can be of higher scale and <10% can be in the lower scale. Similarly for the impact we can use the scaling factor. If the impact is >$40K then scaling is high <$5K the scaling low. The definitions of these scales are defined as part of Risk Management plan. By using this one can arrive the risk priorities like high, medium, low…

If the risk ranking is low it should be kept as watch list.

Risk Probability and Impact Assessment technique is used under the process Perform Qualitative Risk Analysis.