Project Risk Management is a continuous and collaborative process, which includes the application of both Quantitative and Qualitative Risk Analysis techniques (See our previous article on this subject: "Qualitative vs. Quantitative Risk Analysis: What’s the difference?"). Most projects will include several mandatory Quantitative Risk Analysis studies in their scope, however, managing the day-to-day risks inherent on every project is often over-looked in terms of formal Qualitative Risk Analysis requirements. Managing these types of risks typically requires on-going collaboration between project team members, and regular risk review workshops to be held. The methods used in Qualitative Risk Analysis can vary significantly, depending on the type of project being run and the risk management resources available to the project. In this article, we consider five of the most useful Qualitative Risk Analysis techniques applied in project management, which are as follows:
Delphi Technique
This is a form of risk brainstorming, but the essential difference between traditional risk brainstorming and applying the Delphi Technique is that the Delphi Technique makes use of expert opinion to identify, analyse and evaluate risks on an individual and anonymous basis. Each expert then reviews every other experts risks, and a risk register is produced through continuous review and consensus between the experts.
SWIFT Analysis
Standing for “Structured What-If Technique”, this is a simplified version of a HAZOP. SWIFT applies a systematic, team-based approach in a workshop environment, where the team investigates how changes from an approved design, or plan, may affect a project through a series of “What if” considerations. This technique is particularly useful in evaluating the viability of Opportunity Risks.
Decision Tree Analysis
Similar to Event Tree Analysis, but without providing a fully quantitative output, Decision Tree Analysis is most often used to help determine the best course of action wherever there is uncertainty in the outcome of possible events or proposed plans. This is done by starting with the initial proposed decision and mapping the different pathways and outcomes as a result of events occurring from the initial decision. Once all pathways and outcomes have been established, and their respective probabilities evaluated, a course of action may be selected based on a combination of the most desirable outcomes, associated events and probability of success.
Bow-tie Analysis
This is one of the most practical techniques available in helping identify risk mitigations. Bow-tie Analysis starts by looking at a risk event and then projects this in two directions. To the left, all the potential causes of the event are listed and, to the right, all the potential consequences of the event are listed. It is then possible to identify and apply mitigations (or barriers) to each of the causes and consequences separately, effectively mitigating both the probability of risk occurrence and the subsequent impacts, should the risk still occur.
Probability/Consequence Matrix
This has become the standard method in establishing risk severity in Qualitative Risk Analysis. Risk Matrices will often vary in size, but they all essentially do the same thing, and that is: Provide a practical means of ranking the overall severity of a risk by multiplying the likelihood of risk occurrence against the impact of the risk, should it still occur. Through ranking risk probability against risk consequence, one is able to not only determine the overall severity of the risk, but also determine the main driver of the risk severity, be it probability or consequence. This information is then useful in helping identify suitable mitigations to manage the risk, based on its prominent drivers.
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