Quantitative Risk Analysis - Purpose and Objectives
PERFORM QUANTITATIVE RISK ANALYSIS
Welcome to “Perform Quantitative Risk Analysis”, lesson 8 of this course. After the risk management plan and identify risk we need to carry out the analysis part of each risk. There are two types of analysis namely qualitative and quantitative. Qualitative analysis has already been discussed in the previous lesson, while the second analysis, which is quantitative, will be discussed in this lesson. In the next slide we will discuss the agenda of this lesson.
In this lesson, we will understand the purpose and objective of perform quantitative risk analysis process. We will also look into the critical success factors for quantitative analysis, the inputs, tools and techniques, and outputs of this process. Finally, we will understand how to document the results of quantitative risk analysis .Let’s look into these topics one by one from the next slide.
In this slide, will see about the purpose and objectives of perform quantitative risk analysis process. Perform quantitative risk analysis provides a numerical estimate of the overall effect of risk on the objectives of the project. It is used to evaluate the likelihood of success in achieving the project objectives and to estimate contingency reserve, usually applicable for time and cost. Quantitative analysis is not mandatory especially for smaller projects. Quantitative risk analysis helps in calculating estimates of overall project risk which is the main focus.
In the upcoming slides we will discuss about what is required for the effective implementation of risk analysis, the answer that we can expect out of this analysis.
In this slide we will cover the requirements of the implementation of overall risk analysis. It requires complete and accurate representation of the project objectives built up from individual project elements. For example, project schedule or cost estimate. Identifying risks on individual project elements such as schedule activities or line-item costs at a level of detail will lead to specific assessment of individual risks. Also, inclusion of generic risks that have a broader effect than individual project elements helps in overall risk analysis and finally applying a quantitative method using Monte Carlo simulation helps in determining overall impact on the overall project objective.