What are Risk Probability, Impact Assessment and Probability and Impact Matrix?
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 184.108.40.206, & 220.127.116.11