In this instructional video, Helena Liu explains how to perform qualitative risk analysis, a quick and subjective method used before quantitative risk analysis in project management. She outlines the process: establishing common definitions for probability and impact, applying these definitions to each identified risk, and optionally adding categorization and source information. Liu demonstrates a probability‑impact matrix with a 1‑5 scale for both impact (negligible to catastrophic) and likelihood (rare to almost certain), showing how to calculate a risk score (impact × likelihood) and color‑code risks into low (green), medium (yellow), high (orange), and extreme (red) categories. The video emphasizes that this approach helps teams focus risk‑management effort on high‑severity risks and prepares viewers for PMP exam questions. She concludes with a call‑to‑action for free PMP training.
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In this video, you will learn all about qualitative risk analysis. If you haven't done so already, make sure you subscribe to our channel and hit the notification bell as well. So qualitative risk analysis is performed on all of the risk on your project. So you do qualitative risk analysis before you do quantitative risk analysis. This is because qualitative risk analysis is quick and easy to perform. It is subjective based Basically, you will come up with a grid and common definitions for the probability and likelihood of a risk occurring. So after you have, with your team, compiled a list of all of the risks that your project may face, you will run all of the risks through the qualitative risk analysis based on these common definitions that you have established. And we'll take a look at a probability as well as an impact chart in just a moment. There's no special software or tools that you will need. The goal here is just to determine whether a risk is going to be labeled as low, medium, or high. The reason that we want to do this is because it will allow us to see where we want to focus all of our efforts in. We want to focus most of our risk management time and efforts in the high severity risk section. So qualitative risk analysis allows us to sort through these risks, and only the high risk, we'll move on to the quantitative risk analysis where we will do more analysis on that risk and come up with a fallback plan. So here's the steps on how we can compute qualitative risk analysis. So first, we will come up with common definitions for probability and impact. Then we will run each of the identified risks on our project through the same definitions. Then we can include other factors or sources or categorize Maybe this particular risk belongs to a specific categorization that we have defined in our project. So the qualitative risk analysis will also include the appropriate categorization of risk, where it's sourced, and the effect. Now let's take a look at an example of this matrix. So here we have a probability and impact matrix example. Here on the rows, we can see the consequences Or the impact, which is ranked from 1 to 5, from negligible to minor to moderate to major and catastrophic. And on the columns, we have the likelihood. So this is how likely this risk is to occur, from, again, ranked from 1 to 5, 1 being rare and 5 being almost certain. So if a risk has a consequence rating of 5 and a likelihood rating of 5, that gives this risk a overall score of 25, and you can see that it is in red, which means this is an extreme risk here. So based on the colors that we can see here, we can group these risks with low, medium, high, and extreme. So low is the green. We can see the legends at the bottom. The yellow is moderate, the orange is high, and red is extreme. So this allows us to categorize all of our risks by giving it a severity rating as well as a likelihood rating. And the definitions that we come up with for our probability and impact will remain the same throughout our project. So this is just a quick way— we just run all of our risk through this chart, we give this risk a probability and a likelihood, and we see what score this matrix will give us. And every single project will have its own unique matrix, so you come up with the scale that you want for the probability and impact and the colors and where the colors will bend for each specific project. This chart will look a little different. This is just an example here, and with that, you will be able to find out whether the risk on your project is low, medium, or high, and this will be a quick way for you to sort out where your high severity risks are, and this will allow you to concentrate your your risk management efforts. So this is just a quick tip for your upcoming PMP exam. If you want more tips and tricks just like this, make sure you sign up for our free training at www.examspm.com/free where you will learn how to get your PMP certification in the next 6 weeks or less. I can't wait to see you there. I can't wait to share all these tips and tricks with you, and I will see you very soon.
