Analysing Risk From The Root Course To The General Impact (Essay Sample)

Risk Analysis
Name
Institution
Risk Analysis
1 What are the differences between qualitative and quantitative risk analysis? Explain.
Qualitative and quantitative risk analysis are two basic processes in the project risk management area. Qualitative risk analysis involves the process of evaluating individual risks for their likelihood of occurrence and multiplying this probability with the impact of the risk on the project objective for purposes of prioritizing the risks depending on the risk score. Quantitative risk analysis, on the other hand, is the ultimate process of availing numerical estimates of overall effects of collective risks on the project when considerations are made of all risks simultaneously. The numerical estimates regard cost and schedule. Prioritized risks in the qualitative risk analysis are updated by the statistical estimates provided by the quantitative risk analysis (Schwalbe, 2013).
The two concepts differ in that qualitative risk analysis addresses the individual risks of the project whereas quantitative risk analysis addresses the overall project risks. Overall risks involve the combined effects of all risks of the project with all their possible correlations and interdependencies. Cooper (2015) argues that both quantitative and qualitative risk analysis employ numbers for purposes of risk rating and priority setting, however, qualitative risk analysis is a subjective form of evaluation while quantitative risk analysis is a more objective form of assessment. These assessment forms are assigned regarding cost terms and value. For example risk rating in the qualitative might be '10' after multiplying P and I values of the single risks but for quantitative, there is the establishment of the overall costs of the project regarding cash such as $25,000.
Other differences include; the qualitative form is used for small projects since quantitative risk analysis is time-consuming hence efficient for large projects that take time. Secondly, the qualitative analysis is done first followed by the quantitative analysis (Cooper, 2015). Lastly, the qualitative risk analysis is focused on day to day individual risk evaluation while the quantitative form is focused on overall project risk management aimed for overall decision making.
2 When is each type of analysis appropriate? Explain.
Qualitative and quantitative forms of risk analysis can be used simultaneously or within a chosen order to fill a given defined period gap (Hilson, 2012). Understanding the times appropriate to implement either of the two risk analysis concepts is crucial in projecting on the recognized and unrecognized risks that may have adverse impacts on the project.
Quantitative risk analysis is used when the organization in question can be able to map a risk to a given amount of money. This is because the evaluation process depends on the ability to determine the maximum quantitative loss that is associated with the occurrence of the risk. Similarly, the quantitative risk analysis can be employed when the anticipated compromises are linked to quantifiable loss of extra money through successive effects of the initial risk for example compromising user data by anticipation of a potential loophole that can attract hackers. The loss of client data to the hackers can escalate to prosecution or demand for compensation which disrupts project budgeting and the organization as a whole.
Quantitative assessment offers insight on the possible amount to be lost in case the compromise plus the successive risks occur. Lastly, quantitative risk analysis is used when there are no known limits for the anticipated risks. This offers the conclusion that quantitative risk evaluation offers protection and safety measures for all potential defined risks (Schwalbe, 2013). The organization in question can, therefore, implement all risk measures revolving around the project.
Qualitative risk assessment, on the other hand, is used when the risks in question are recognized (Schwalbe, 2013). This method is employed when there are issues that are looked upon as impediments in project management. These obstacles are assumed to be able to convert to decisive risk factors. Similarly, the method is used when the risks can be rated for prioritization against a given vulnerability.
3 What type of analysis will you use for the IRTC customer service system project? Why?
Considering the IRTC situation, there are multiple recognizable ri...