PMI Risk Management Professional Practice Exam

What technique is commonly used to prioritize identified risks based on their impact and likelihood?

1. Expert judgment

2. Delphi technique

3. Risk probability and impact matrix

4. Historical data analysis

The correct answer is: Risk probability and impact matrix

The risk probability and impact matrix is an effective technique for prioritizing identified risks based on their potential impact on project objectives and the likelihood of their occurrence. This matrix allows project managers to evaluate risks visually, categorizing them into a grid where one axis represents the probability of occurrence and the other the impact of that risk should it occur. By plotting risks within this matrix, project managers can quickly ascertain which risks require immediate attention and resources. High-probability and high-impact risks are prioritized, ensuring that the team's efforts are directed toward those risks that could significantly affect the project's success. This systematic approach helps in optimizing risk response strategies, meaning that resources can be allocated efficiently. Using tools like the risk probability and impact matrix enhances clarity and communication among stakeholders regarding risk management efforts, as it provides a visual representation of which risks pose the greatest threat to the project. This technique is widely adopted in risk management practices due to its simplicity and effectiveness in guiding decision-making processes.