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11 - PROJECT RISK MANAGEMENT

accustomed to working together). The analysis may be distorted by the impact of recent work (i.e., the tendency
to emphasize the most recent experience rather than the long-term average). A risk that became a problem on a
previous project may be considered likely to occur in the next project unless corrective action has been taken to
reduce the probability of occurrence or impact if it should occur; the problems encountered in previous projects
may be considered to be thoroughly nullified by lessons learned and mitigations applied, so that the probability of
recurrence is considered to be minimal. However, the precautionary mitigations may impose extraordinary costs
in monitoring and control, such as increasing testing, scheduling a large number of project reviews and executive
presentations, and imposing heavy documentation requirements, which in themselves create the risk of excessive
cost and noncompetitive business processes.
Qualitative ratings of risks for software projects can be based on subjective values such as low, medium,
high, or very high for both probability and potential impact, as illustrated in Table 11-2. A low-risk exposure might
correspond to a small schedule delay or cost overrun or a minor quality issue; a medium value to a more significant
value of a project or product parameter, a high value to a major issue; and a very high value to a potentially
catastrophic situation.

For adaptive life cycle projects, a risk exposure matrix can be used to prioritize features for inclusion in the next
iterative cycle by focusing on the features that will have the largest risk/return value for the business or the end
users, as illustrated in Figure 11-2. This is similar to opportunity analysis, stated in risk management terms.

11.3.3 Perform Qualitative Risk Analysis: Outputs

The output for performing qualitative risk analysis in Section 11.3.3 of the PMBOK Guide is applicable to
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performing qualitative risk analysis for software projects.

11.3.3.1 Project Documents Updates

See Section 11.3.3.1 of the PMBOK Guide.
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Table 11-2. A Typical Qualitative Risk Exposure Matrix

Impact Low Medium High Very High
Probability
Low Low Medium High Medium
Medium Low High High High

High Medium High Very High Very High
Very High Medium High Very High Extreme

202 ©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition
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