The reason for the complexity is that the inputs for the analysis are not ranges or labels of ranges, but can be expressed in numerous ways: Calculation Risk Scores Based on Results of Quantitative AnalysisĬalculating risk scores from quantitative risk analysis, such as schedule risk analysis, integrated cost and schedule risk analysis and others is both more complex and without any standard process. So we can see that the risk scoring calculation can have a fairly substantial impact on how the risk is assessed. Using the example above, the risk score would be calculated: This takes the probability and multiples it by the average score of all risk impacts. Risk score = Probability (5) x Highest Impact (4) = 20 For example, if you had a risk that had been assessed: Probability x highest impact: this is a very common qualitative risk scoring calculation in which the highest impact score for all of the impact is used to calculate the risk score. How do can calculate risk scores if there are multiple categories? Two common methods are: Risk scores can then be further defined into categories such as Catastrophic, Serious, Moderate, and Low based on the calculated scoreĪs mentioned previous risks can have multiple impacts called risk categories.

The risk score = High (4) x Medium (3)= 12 If we had risk that was assessed to have a high probability and medium impact it would land on the matrix as shown below. Our matrix now includes these values for each label Label In order to calculate risk score, we need assign a value to each of the probability and impact levels (e.g. These are referred to as risk categories and can be assessed independently.įor each risk category, we want to provide a common definition to aid in the assessment Label In addition, risk impacts can affect more than one project objective such as cost, schedule, safety, quality or others. Like probability matrixes, assessing impacts can be just as problematic, if there is not a common definition of what each impact level means. In this way, when assessing probability, all team members have a common understanding of the meaning of each category Risk Impact Ranges An example could be as shown below: Label What does Rare or Very Low Probability mean? Therefore, it is recommended that each category has a probability definition. To clarify this we can add additional detail to each probability category so that there is a common understanding i.e. Some methods attempt to improve this by using categories such as Rare, Unlikely, Possible, Probable and Certain however, this still leaves us with the question of defining what these terms actually mean. The problem with these categories is that they can be very ambiguous and have different meanings depending upon who you asks. For example probability could be categorized into 5 levels: Very Low, Low, Medium, High, or Very High. Risk probability characterizes the chance that a certain event may occur during the course of a project. In quantitative risk assessments, risk probability and impact inputs can be discrete values or statistical distributions. For qualitative risk assessment, risk scores are normally calculated using factors based on ranges in probability and impact. Typically, project risk scores are calculated by multiplying probability and impact though other factors, such as weighting may be also be part of calculation. Risk score is a calculated number (score) that reflects the severity of a risk due to some factors.

Risk probability impact indicators