Quantifying Risk

The Perform Quantitative Risk Analysis process evaluates the impacts of risk prioritized during the Perform Qualitative Risk Analysis process and quantifies risk exposure for the project by assigning numeric probabilities to each risk and their impacts on project objectives. This quantitative approach is accomplished using techniques such as Monte Carlo simulation and decision tree analysis. To paraphrase the PMBOK® Guide, the purpose of this process is to perform the following:

• Quantify the project’s possible outcomes and probabilities.
• Determine the probability of achieving the project objectives.
• Identify risks that need the most attention by quantifying their contribution to overall project risk.
• Identify realistic and achievable schedule, cost, or scope targets.