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Manage risk; qualitative and quantitative system

Short answer

Plan risk process, identify risks, analyze qualitatively and quantitatively, respond, and monitor. Qualitative analysis ranks risks by probability and impact using a matrix. Quantitative analysis estimates numerical effect using EMV (EMV = P × Impact), decision trees, sensitivity analysis, and Monte Carlo simulation.

How could you effectively manage risk in a project? Explain the qualitative and quantitative risk management system.

Managing risk effectively

  1. Plan the risk process and assign responsibility.
  2. Identify risks early with the team and stakeholders; keep a risk register.
  3. Analyse and rank the risks (qualitative, then quantitative).
  4. Plan responses: avoid, transfer, reduce, accept; add contingency reserve.
  5. Monitor, control and update the risks through the project life.

Qualitative risk analysis

It assesses each risk by probability and impact on a descriptive scale to set priority. It is quick and needs no detailed data.

 Impact ->   Low      Medium     High
 Prob.
 High       Medium     High      High
 Medium      Low      Medium     High
 Low         Low       Low      Medium

Tools: probability-impact matrix, risk categorisation, urgency assessment, expert judgement.

Quantitative risk analysis

It gives a numerical estimate of the effect of the priority risks on cost and time.

  • Expected monetary value: EMV = probability x impact (money)
  • Decision tree: compares choices with probability and money outcomes
  • Sensitivity analysis: which variable (e.g. cement price) most affects the result
  • Monte Carlo simulation: repeated random runs to get the probability of finishing within a given cost or time
  • PERT: three-point estimates for duration

✓ Answer checked by Claude Opus 5.5 (high effort)

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