# Project Management Central

Risk Management and Probability
 Network:418
In the risk management when we talk of EMV expected monetary value and the term probability, how do we ascertain probability of risk or event occurrence. Can someone explain with example of an activity or event of risk and how to derive it's probability of occurrence. While we say that Qualitative risk analysis is a subjective term where we roughly create a matrix of probability and impact but how different is Quantitative risk analysis which also is derived out of subjective probability and impact.
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 Anonymous
Probability calc vary from one environment to another but the bottom line is Historical Data. If you do not have them then you can only guess. If you have them, then based on the history, you can decide
 Network:1572
Quantitative risk analysis will usually involve the use of some historical data to make it a bit more objective than qualitative risk analysis, but even if you don't have such historical data you can come up with simple rules of thumb for mapping qualitative probability assessments to quantitative ones (e.g low = 10% likelihood of occurrence, medium = 25% likelihood of occurrence) for the purposes of using EMV.

Kiron
 Network:1883
It is a great question that people facing lot of times mainly because risk is the driver for all project decisions (while some people are not aware of that): projects are started to capture an opportunity and opportunity has an asociated risk then project is driven by that risk. Here my comments: 1-I have worked on multiple domains. In some domains (finance, assurance, health, medicine devices, nuclear power related) I had the opportunity to work in all related to risk is a "way of living" then you have no problem to find people that will support you into all related to project risks. In others, that is not the situation. 2-all related to project risks must be defined from all realted to organizational risk management. That is critical to undertand. But sometimes you do not find an organizational risk management process defined. 3-I worked with organizations like CMU SEI to create some guides to solve the problem about do not have the possibility to calculare probabilities. Mostly of this work is inside "Managing risk: methods for software systems development, Elaine M. Hall, ISBN: 0?201?25592?8" page 101