February 6, 2007

Risk Probability and Impact Definitions

Within Risk Management Planning, it is essential to define risk probability and impact. Commonly an impact scale is developed which reflects the impact of negative impacts of threats or the positive aspects of opportunities. Below is an example which reflects the realive and numeric methods.

Defined Conditions for Impact Scales of a Risk on Major Project Objectives
(Examples are shown for negative impacts only)

Project Objective
Very low / 0.05
Low / 0.10
Moderate / 0.25
High / 0.40
Very High / 0.80

Cost
Insignificant cost increase
< 10% Cost Increase
10 - 25% cost increase
25 - 40% Cost Increase
>40% Cost Increase

Time
Insignificant time increase
< 5% Time Increase
5 - 10% Time Increase
10 - 20% Time Increase
> 20% Time Increase

Scope
Scope decrease barely noticeable
Minor Areas of scope affected
Major areas of scope affected
Scope reduction unacceptable to sponsor
Project end item is effectively useless

Quality
Quality degradation barely noticeable
Only very demanding applications are affected
Quality reduction requires sponsor approval
Quality reduction unacceptable to sponsor
Project end item is effectively useless
This table presents examples of risk impact definitions for four different project objectives
Posted by Elyse at February 6, 2007 5:25 AM
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