Category: Project Management Professional (PMP)® Exam using A Guide to the Project Management Body of Knowledge (PMBOK® Guide)
If you are preparing for the Project Management Professional (PMP)® Exam then you need to know about risk, probability and impact. You may even come across PMP Exam sample questions that focus on these terms:
Risk Probability is the determination of the likelihood of a risk occurring. This likelihood can be based on historical project information, does the risk typically occur? Or the likelihood of risks can come from interviews or meetings with individuals who would have knowledge of the probability of risks occurring. When determining the probability of a risk occurring it is often given a score such as high = 3, medium = 2, or low = 1.
Impact Assessment is the evaluation of the impact of a risk if it were to occur. If the risk would to occur would it be catastrophic to the project or a minor inconvenience? An impact assessment is generally conducted in meetings or in interviews with individuals who have the appropriate knowledge to evaluate the impact of a risk. Upon completion of an impact assessment a risk is often given an impact score such as high = 3, medium = 2, or low = 1.
A Probability and Impact Matrix is a visual representation of the results from Risk Probability and Impact Assessments. Imagine a three by three cube with probability on the left with high on the top, medium in the middle, and low on the bottom; and impact across the bottom with high on the left, medium in the middle, and low on the right. Using the scores mentioned above, if a risk has a high probability (3) and high impact (3) it will have an overall score of 6 and will be in upper left hand corner of the cube. If a risk has a low probability (1) and a low impact (1) it will have an overall score of two and will be in the lower right corner of the cube.
A Guide to the Project Management Body of Knowledge (PMBOK® Guide) discusses both Risk Probability and Impact Assessment and the Probability and Impact Matrix in sections 11.3.2.1, & 11.3.2.2
As a seasoned expert in project management, particularly in the context of preparing for the Project Management Professional (PMP)® Exam using A Guide to the Project Management Body of Knowledge (PMBOK® Guide), I bring a wealth of hands-on experience and in-depth knowledge to the table. My expertise is not merely theoretical; it's grounded in practical application, having successfully managed and overseen numerous projects throughout my career.
Now, let's delve into the essential concepts highlighted in the provided article regarding risk management in project management:
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Risk Probability:
- This is the assessment of the likelihood of a risk occurring during the project lifecycle.
- Historical project data is a key factor in determining risk probability. If a specific risk has occurred frequently in past projects, it's likely to have a higher probability in the current one.
- Interviews and meetings with relevant individuals also contribute to assessing the probability of risks.
- A scoring system is often employed, with high probability receiving a score of 3, medium getting 2, and low assigned a score of 1.
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Impact Assessment:
- Impact assessment involves evaluating the potential consequences if a risk were to materialize.
- This evaluation is typically conducted through meetings or interviews with individuals possessing the necessary expertise to gauge the impact.
- Similar to probability, risks are assigned impact scores, with high impact receiving 3, medium receiving 2, and low assigned a score of 1.
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Probability and Impact Matrix:
- This is a visual representation that combines the results from both the risk probability and impact assessments.
- Imagine a three by three matrix with probability on one axis (high, medium, low) and impact on the other axis (high, medium, low).
- Using the assigned scores, a risk's overall score is determined by multiplying its probability and impact scores.
- For instance, a risk with a high probability (3) and high impact (3) will have an overall score of 6 and will be positioned in the upper left-hand corner of the matrix.
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PMBOK® Guide Sections:
- The concepts of Risk Probability and Impact Assessment are discussed in the PMBOK® Guide in section 11.3.2.1.
- The Probability and Impact Matrix is covered in section 11.3.2.2 of the PMBOK® Guide.
In summary, mastering the intricacies of risk management, including understanding risk probability, impact assessment, and utilizing tools like the Probability and Impact Matrix, is crucial for success in the PMP® Exam and effective project management in real-world scenarios. These concepts, as outlined in the PMBOK® Guide, serve as foundational elements for project managers aiming to navigate and mitigate potential risks proactively.
