What is project risk analysis? How to do it and methods

The project risk analysis is very important to ensure the success of the project. It also helps project managers have an overview of potential situations that could affect the final result.

1. What is project risk analysis?

Project risk analysis is the process of identifying and evaluating potential risks that negatively affect the project through the use of tools and related techniques. The analysis, project risk management helps managers predict potential risks and how they impact the project in terms of quality, progress, and progress. degrees or costs when they appear.

This is an important step in managing enterprise projects. Potential risk analysis is not only for project management but it is also applied in many different fields such as administration, construction, and production.

2. How to analyze project risks

Enterprises want to minimize risks during project implementation. Creating an analysis plan to identify and evaluate potential risks and find ways to preserve or minimize them is essential. Let's review with Viindoo the ways to analyze project risks.

2.1 Analyze the probability of risk occurrence

The probability of a project risk occurring will often not follow a certain rule. However, businesses can determine that risk using data and experience from previous similar projects. This will help businesses determine how low or high the risk level of the current project is.

What is project risk analysis? How to do it and methods

2.2 Analyze the impact of risks

Some impacts of risks affect the project such as economics, materials, resources or project progress and schedule. To analyze these impacts, businesses can rank risks from low, medium, and high levels depending on their importance to the project.

2.3 Analyze the level of risk

Risk level combined with risk probability is one of the formulas used by many businesses to determine the risk level of a project. With the level of risk determined, the business will come up with a strategic plan to see if the business can control it or not.

Formula to calculate risk level:

Level of risk = risk impact * risk probability

3. Current effective project risk analysis methods

Choosing effective project risk analysis methods is important because they can help maximize forecasting and risk management. Below are two project risk analysis methods that are considered the most effective today.

3.1 Quantitative analysis method

Quantitative risk analysis method is to determine whether the project is feasible and suitable for reality or not. This method is clearly demonstrated through the number of possible risks and their impact on the overall project goals.

Depending on the project's risk management activities, businesses can apply quantitative analysis together or separately with qualitative methods. To determine the feasibility of high-value projects, businesses will use quantitative methods to analyze risks.

When using this method to analyze risks, businesses need to conduct research from aspects such as management planning, risk management plans, costs, project organization processes, and other factors environment and risk register.

What is project risk analysis? How to do it and methods

Thanks to diverse input data sources, the research process project risk analysis can evaluate project risks accurately and objectively. However, this method requires the use of specialized software and expert knowledge in building and analyzing risk models, so it is difficult to implement, time-consuming and costly.

3.2 Qualitative analysis method

Risk analysis using qualitative methods is the assessment of the likelihood and level of impact from which the importance of the risk can be determined. This is a foundational method for businesses to conduct more in-depth analysis of project risks using other methods

The implementation of this method focuses on assessing the probability of a risk occurring and its impact on the project. As a result, a risk prioritization table will be established and managers will be able to focus on addressing higher priority risks.

To analyze project risks through qualitative methods, businesses need to ensure that information collection inputs such as project risk management plans, business environment factors, and organizational processes are collected. project, project scope and risk register.

A management plan and project risk analysis should be implemented early so that predictions can be made before project implementation. judgment. The result of project risk analysis using qualitative methods is to include these risks in project documents.

4. Compare quantitative and qualitative analysis methods

Currently, there are many methods to analyze potential risks to the project and every method has its own advantages. To help businesses see more specifically about these two risk analysis methods, Viindoo offers the following reference criteria:


haracteristic	Qualitative method	Quantitative methods
Concept	Is the process of evaluating risks according to priority, individually. From there, it can be applied to serve in-depth risk assessments during the project management process	Is an overall analysis of risks that can impact the results of project implementation through specific, detailed numbers.
Meaning	You can rely on the risk order to handle tasks with higher priority. In addition, this method also identifies those responsible for resolving potential risks.	Quantitative methods can evaluate the overall feasibility and feasibility of the project when affected by potential risks. The results of the research also help businesses plan and have plans to deal with risks.
Mandatory	Takes place throughout the project implementation process	Often used in high value projects.
Requirements for use	Requires the evaluator to have a professional, risk-biased attitude to determine the correct priority and analyze risks that may affect the project.	Using the software method requires qualified practitioners to be able to analyze and evaluate hidden information that affects the project.
The relationship between the two methods	Is the foundation for using quantitative analysis methods of the project	Usually performed after quantitative analysis methods. There are cases where this is done after the risk response plan.
Tools and techniques used	Assess the quality of risk data: Analysis results can be misleading if the input data is unreliable. Therefore, assessing the quality of data is important for qualitative methods. Assess the likelihood and impact of risks: Depending on the effects of risks such as effects on overall cost, quality and efficiency, classify them into risk register or watchlist for monitoring. Risk classification: Classify risks by source, scope of impact, and cause. Determine which risks the project will be greatly affected by. Potential and impact matrix: the project team will create a matrix that combines likelihood and impact to divide risks by priority. Bubble chart: A bubble chart will display the relationship between risk parameters. Risk workshop: Based on the project team's experience, risks will be analyzed and solutions will be provided.	Simulation: Simulate individual risks that affect the overall project goals. Sensitivity Analysis: Analyze which risk impacts the project may be most affected by. Tornado chart: Judge the level of impact on the project through the correlation coefficient calculation. Decision tree analysis: Through the branches in the decision tree, you can choose suitable options to solve the problem.