Risk Analysis is the activities related to defining the characteristics of a risk and the degree to which it can impact objectives.
It involves evaluating the nature, probability, and potential consequences of identified risks to inform prioritization, response planning, and decision-making.
Key Characteristics
- Evaluative in Nature – Focuses on understanding likelihood and impact
- Supports Prioritization – Helps determine which risks require attention
- Forms the Basis for Response – Informs the selection of appropriate risk strategies
- Can Be Qualitative or Quantitative – Uses descriptive or numerical methods
Example Scenarios
- Assessing the probability and schedule impact of a vendor delay
- Using a probability and impact matrix to rank project risks
- Running Monte Carlo simulations to evaluate overall project risk exposure
Role in Risk Management
- Enhances Decision-Making – Provides data for proactive risk handling
- Improves Resource Allocation – Focuses efforts on high-priority risks
- Feeds into Risk Response Planning – Ensures tailored, effective actions
- Supports Communication – Clarifies risk exposure to stakeholders
See also: Qualitative Risk Analysis, Quantitative Risk Analysis, Risk Register, Risk Assessment, Probability and Impact Matrix.