Quantitative Risk Analysis
Numerically analyzing the combined effect of risks on project objectives.
Quantitative risk analysis assigns numerical probability and impact values to risks, then models their combined effect on objectives such as cost and schedule. Common techniques include Monte Carlo simulation, which runs many scenarios to produce a probability distribution of outcomes, and Expected Monetary Value (EMV), which multiplies a risk’s probability by its monetary impact and underpins decision tree analysis. Qualitative analysis prioritizes risks subjectively; quantitative analysis digs deeper into those high-priority risks to gauge the likelihood of meeting targets and the contingency reserve needed. It is optional on many projects.
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