The Risk Ruler and Group Decision
One of the most important processes in the risk discipline is performing qualitative risk analysis—a way to understand and rate risks so that we can consider responses. A main concern I have—and one that I think is common within this process—is the so-called “risk ruler.” How do I determine whether a given delay is low, medium or high? How do I build this scale? In addition, how do people actually use this ruler?
We should begin with a common understanding of the definitions of risk probability and impact. It is an output of the “Plan Risk Management” process. Once the risks are identified, we use this scale to help us understand what the major risks are. We are used to the scale with five points; some people might argue that using an odd number of options naturally leads to the central option. We can try to move away from that by using a four-point scale, thus forcing our evaluators to rate something as high or low. It could be a good option to enhance the scale.
Another question arises when we have (and I think we always do!) multiple impact categories. How do you add up the impacts?
One way is simply applying the probability to the sum of the impacts:
Severity = Probability x (Impact1 + Impact2 + … Impactn)
Suppose we have three impact factors on our project: schedule, cost and quality. One of the things we
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