Page 213 - Project+

certainty the risk event will occur.

The quickest way to determine probability is by using expert judgment. This typically
comes from knowledgeable project team members, stakeholders, or subject-matter
experts who have experience on similar projects. Ask them to rate the probability of
occurrence of each risk on the list. You could also review historical data from past
projects that are similar to the current project to rate the probability of risk occurrence.

Risk Impact Impact is the consequence (or opportunity) the risk poses to the project

if it occurs. Some risks have impacts that are very low and won’t impact the overall
success of the project if they were to occur, while others could have impacts that cause
a delay in the project completion or cause a significant budget overrun. Again, rely on
the expert knowledge and judgment of the team members and on historical data to rate
the severity of each risk. You can use a simple rating like the following to rate risk
impact:

High

Medium

Low

Next, you’ll convert the high, medium, and low scores to a number between 0.0 and
1.0, with a score of 1.0 having the highest impact to the project, so that you can plug
the scores into the probability and impact matrix. For example, a high impact may
have a score of 1.0, a medium impact may have a score of 0.5, and a low impact may
have a score of 0.1.

Check with your PMO to determine whether there are templates available
that have predefined ratings for risk impacts.

Next you’ll construct a probability and impact matrix to calculate a final risk score for
each of the risks on your list. The final score is determined by multiplying the
probability by the impact. Table 7.5 shows a basic probability and impact matrix.

TABLE 7.5 Probability and impact matrix

Risk Probability Impact Risk Score

Risk A 0.9 1.0 0.9
Risk B 0.3 0.5 0.15

Risk C 0.8 0.1 0.08

Risk D 0.5 0.5 0.25

The closer the risk score is to 1.0, the more likely the risk will occur and have a
significant impact on the project. In Table 7.5, risk A has a high probability of

213