Asessment Risk

Teknik Industri Universitas Brawijaya

Assessing Impacts of Risk Events

Once risk events have been identified and classified,

we turn our attention to answering the question:
• What are the consequences of the occurrence of
the target risk events, particularly the red zone
events?
• Will this lead to major increases in expenses and
decreases in revenue? (If so, by what amounts?)
• Will our clients face physical danger? (If so, what
kinds of dangers?)
• Will we encounter delays in rolling out new
products? (If so, how long will the delays be?)
Assessing Impacts of Risk Events—Qualitative
Impact Analysis

The attempt to assay the consequences of the

occurrence of risk events is called risk impact
analysis (qualitative analysis and quantitative
analysis)

Effective qualitative impact analysis is heavily

dependent on experience, good logic, and good
judgment
 Prioritise risks
according to
probability & impact

What is
Qualitative Identify the main
Risk areas of risk exposure

Analysis?
Improve
understanding of the
risks
Qualitative vs. Quantitative Risk Analysis

Qualitative risk analysis

• involves identifying threats (or opportunities), how likely they are to
happen, and the potential impacts if they do.
• The results are typically shown using a Probability/Impact ranking matrix.
• Qualitative risk analysis operates in a more generalised, “big-picture”
space.
• Qualitative risk analysis is the most common, fastest and most cost
effective means of establishing risk priorities and planning risk responses
• It is critical to establish definitions of the levels of probability and impact
so as to reduce the influence of bias
Quantitative risk analysis,
• which applies numerical values and uses verifiable data.
 Simple assessment methods

• doesn't require training, as it doesn't rely

on any complicated tools or software.
• can determine areas of greater risk in a
Benefits of short time and without expending cost.

Qualitative Easy prioritisation

Risk • classifies risks according to their likelihood

and impact.

Analysis • This makes it easy to determine which risks

an organization should focus on – the ones
falling into the highest likelihood and
impact categories.

Clear presentation options

Limitations of Qualitative Risk Analysis

Subjective Evaluation Limited Scope

produces no metrics, it depends on the assesses each risk on a project but
perception of a person carrying out the doesn't provide an assessment of the
study. overall project risk exposure.
In order to minimise subjectivity, a The analysis also won't calculate how
qualitative risk analysis should involve much risk management activities and
several people. risk treatment will cost.
The accuracy and detail of the analysis
depends on previous team experience.
If the risk team hasn’t experienced a
project type, they might miss some risks
or assess them inadequately.
Limitations of Qualitative Risk Analysis

Lack of Differentiation
Once several risks fall into the same category, for
example, high likelihood and medium impact,
there is no further way to differentiate between
the severity of risks and no way to determine
which risk should be dealt with first.
Assessing Impacts of Risk Events—Qualitative
Impact Analysis

• The qualitative approach

recognizes that experience
coupled with hunches and good
judgment enable people to
develop insights that they cannot
develop if they are constrained by
the requirement that they work
only with measurable phenomena
Probability & Impact

In deciding how serious a risk –Probability - the likelihood of the

risk occurring
is we tend to look at two –Impact - the consequences if the
parameters: risk does occur

– Time
Impact can be assessed in
– Cost
terms of its effect on: – Quality

There is also a third

– Risk proximity - when will the risk
parameter that needs to be occur?
considered:
Probability -Scale
Impact Scale
Same Linear Scale For Both Axes
Assigning Numeric Scales
The next table doubles the numeric value each time on the impact
scale.

This is perhaps a more useful model as it gives more weight to risks

with a high impact.

A risk with a low probability but a high impact is thus viewed as much
more severe than a risk with a high probability and a low impact.

This avoids any 'averaging out' of serious risks.

Assigning Numeric Scales
Risk Rating
Risk Rating