PMI Risk Management Professional Practice Exam

Which analysis technique involves determining the likelihood and impact of identified risks?

1. Quantitative analysis

2. Impact analysis

3. Qualitative analysis

4. Root cause analysis

The correct answer is: Qualitative analysis

The analysis technique that involves determining the likelihood and impact of identified risks is qualitative analysis. This method is essential in the risk management process as it provides a systematic approach to assess and prioritize risks based on their potential effects on project objectives. Qualitative analysis focuses on the attributes of risks, assigning a level of probability to the occurrence of each risk and evaluating the consequences should they materialize. By categorizing risks into different levels of severity or urgency, project managers can allocate resources more effectively, develop mitigation strategies, and determine which risks require more detailed quantitative analysis or action plans. The essence of qualitative analysis lies in its ability to help teams understand the overall risk landscape, facilitating informed decision-making based on a combination of subjective judgment and any available data. This technique is often preferable in the early stages of risk assessment, as it does not demand extensive numerical data and can be executed relatively quickly to provide immediate insights. Other techniques listed, such as quantitative analysis, involve more in-depth numerical evaluations and calculations related to risk impacts but do not primarily deal with likelihood and impact in an evaluative manner as qualitative analysis does. Thus, the emphasis on assessing both probability and impact makes qualitative analysis the correct choice in this context.