PMI Risk Management Professional Practice Exam

Which analysis is typically more subjective and relies on expert judgment?

1. Qualitative risk analysis

2. Quantitative risk analysis

3. Monte Carlo analysis

4. Earned value analysis

The correct answer is: Qualitative risk analysis

Qualitative risk analysis is the correct answer because it primarily focuses on assessing risks based on their characteristics, rather than numerical data. This approach often involves gathering insight from experts and stakeholders to evaluate the likelihood and impact of identified risks. The subjective nature of this analysis comes from the reliance on personal judgment, experiences, and perceptions, which can vary from one expert to another. In qualitative risk analysis, tools such as risk matrices or rankings are commonly employed to categorize risks based on their severity and probability without necessitating precise quantitative measurements. This allows project teams to prioritize risks and devise there response strategies accordingly, but it inherently involves a degree of subjectivity as interpretations can vary. In contrast, quantitative risk analysis employs numerical methods and data to evaluate risks. It aims to quantify the probability and impact in terms of potential monetary loss or schedule delays. Techniques like Monte Carlo analysis are statistical methods that also rely on certain assumptions and models but are more mathematical in nature. By understanding these distinctions, it becomes clear why qualitative risk analysis stands out as the method that is more subjective and dependent on expert judgment.