--- title: "Risk management; qualitative, quantitative; steps" subject: "Project Engineering" chapter: 5 key: "semester_7/project_engineering:risk-management-qual-quant-steps" source: https://www.bctengineer.com/q/semester_7/project_engineering/risk-management-qual-quant-steps site: BCT Engineering --- # Risk management; qualitative, quantitative; steps Project Engineering · Chapter 5: Project Risk Analysis and Management - Asked in: 2076 Chaitra, 2+6+4 marks - Video: [Project Management Concept #2: Qualitative Risk Analysis vs Quantitative Risk Analysis](https://www.youtube.com/watch?v=hx-r0sdp2wk) — Belinda Goodrich, Speaker, Author, Educator - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/project_engineering/risk-management-qual-quant-steps - Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-5 ## Question Define project risk management. What is qualitative and quantitative risk analysis? What are the major steps that you take in managing risks? ## Short answer Project risk management is systematic planning, identification, analysis, response, and monitoring/control of risks. Qualitative analysis ranks risks by probability and impact using descriptive scales; quantitative analysis calculates numerical effects using EMV, decision trees, sensitivity, and Monte Carlo. Steps: plan, identify, qualitative, quantitative, response planning, monitor and control. ## Answer #### Project risk management **Project risk management** is the systematic process of planning, identifying, analysing, responding to, and monitoring and controlling risks in a project, so that the chance and effect of negative events are reduced and the chance of positive events is increased. #### Qualitative and quantitative risk analysis **Qualitative analysis** ranks risks by their probability and impact using descriptive scales (very low to very high). It is fast, cheap and used first. Tools: probability-impact matrix, risk categorisation, risk urgency assessment, expert judgement, risk data quality assessment. **Quantitative analysis** gives numerical values of the effect of risk on the project objectives. It is applied to the high-priority risks. Tools: expected monetary value (EMV = probability x impact), decision tree analysis, sensitivity analysis (tornado diagram), simulation (Monte Carlo) and PERT three-point estimation. ```text Impact -> Low Medium High Prob. High Medium High High Medium Low Medium High Low Low Low Medium ``` | Basis | Qualitative | Quantitative | |---|---|---| | Output | Priority rank | Numerical effect (money, days) | | Data | Judgement | Statistical/estimated data | | Time and cost | Low | High | | Applied to | All risks | High-priority risks | #### Major steps in managing risks 1. **Risk management planning:** decide the approach, team, roles, budget, tools, risk categories, probability-impact scales and reporting. The output is the risk management plan. 2. **Risk identification:** find the risks which may affect the project and document them in a risk register (brainstorming, checklist, Delphi, SWOT, interviews, experience). 3. **Qualitative risk analysis:** rank the risks by probability and impact using a probability-impact matrix to find priority risks. 4. **Quantitative risk analysis:** estimate the numerical effect of the main risks on cost and time (expected monetary value, decision tree, sensitivity analysis, Monte Carlo simulation). 5. **Risk response planning:** select the strategy for each risk (avoid, transfer, mitigate/reduce, accept) and prepare contingency plans and reserves. 6. **Risk monitoring and control:** track identified risks, watch for new risks, check the response is working, update the risk register and report. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. What is project risk management? A. Only buying insurance B. A systematic process of planning, identifying, analysing, responding to, and monitoring risks C. A tool for estimating cost D. Reporting a loss after it occurs Answer: B. It is the systematic process that reduces the chance and effect of negative events and increases positive ones. (Key point: Project risk management defined) 2. To which risks is quantitative analysis applied? A. All risks B. High-priority risks C. Only low risks D. Only positive risks Answer: B. Quantitative analysis is slower and costlier, so it is applied to high-priority risks after qualitative ranking. (Key point: Which risks get quantitative analysis) 3. What is the main difference between qualitative and quantitative risk analysis? A. Qualitative gives numerical money values; quantitative gives only ranks B. Qualitative ranks risks by probability and impact on descriptive scales; quantitative gives numerical effects on cost and time C. Qualitative is done only after the project ends D. They are the same process with different names Answer: B. Qualitative analysis sets priority using ordinal ratings; quantitative analysis puts numbers (money, days) on the effect. (Key point: Qualitative vs quantitative) 4. Which is the correct order of the risk management process? A. Identification, planning, quantitative, qualitative, response, monitoring B. Planning, identification, qualitative analysis, quantitative analysis, response planning, monitoring and control C. Planning, qualitative analysis, identification, response, quantitative, monitoring D. Identification, response planning, analysis, planning, monitoring Answer: B. The process is plan, identify, qualitative analysis, quantitative analysis, response planning, then monitoring and control. (Key point: Order of risk management steps) ## Related in Project Engineering - [Qualitative and quantitative risk analysis methods](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aqualitative-quantitative-risk-analysis-methods) — Project Engineering, chapter 5 - [Manage risk; qualitative and quantitative system](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-manage-qualitative-quantitative) — Project Engineering, chapter 5 - [Managing three hydropower project risks](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-manage-three-hydropower-risks) — Project Engineering, chapter 5 - [Risk management cycle; managing risk effectively](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-management-cycle-manage-effectively) — Project Engineering, chapter 5 - [Risk, sources of risk, risk management steps](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-sources-steps) — Project Engineering, chapter 5 - [Risk management and its steps](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-management-define-steps) — Project Engineering, chapter 5, asked 2× ## Related in other subjects - [Qualitative versus quantitative risk analysis](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aqualitative-vs-quantitative-risk) — ICT Project Management, chapter 12 - [Risk management plan](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Arisk-management-plan) — ICT Project Management, chapter 12 - [Project risk](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aproject-risk) — ICT Project Management, chapter 12