Question

When performing Risk Analysis as part of the task Analyse Risk (which is part of the Strategy Analysis knowledge area of the Business Analysis Body of Knowledge), we may develop a risk register as a table of entries for each identified risk.

For each identified risk we make a judgement about probability as being either low, medium or high. We also make a judgement about impact as being either low, medium, or high. These contribute to making a final judgement about the risk’s risk level as being either low, medium or high.

a) Explain the difference between the probability of a risk and impact of a risk, and then describe what the difference between low and high judgement levels mean for these aspects of risk.

b) If a particular risk has been judged to have low probability but high impact, what might its final risk level be judged as?

c) If another particular risk has been judged to have high probability but low impact, what might its final risk level be judged as?

Answer 1

Ans-a)

• Probability of a risk means that how frequently the risk is expected to happen.
• Impact of a risk is the measure of damage done when the risk has occured.(ex project delayed by n days)

when both the probability and impact are low the risk judgement is low risk.

when both the probability and impact are high/medium the risk judgement is high risk.

we can make a risk matrix as following :

Ans b)

low probability * high impact is termed as medium risk.

Ans c)

high probability * low impact is termed as medium risk.