Assessing risk probability

alternative approaches

To practice risk management effectively, project managers must address its two dimensions: risk probability and risk impact. Although there are unambiguous frameworks for assessing risk impact, the field lacks such a model for assessing probability. This paper looks at the alternative techniques currently available for assessing risk probability, techniques that can remove from the risk management process the undermining influence of subjectivity. In doing so, it explains the two dimensions of risk: uncertainty (probability) and effect on objectives (impact); it describes the difficulties in determining a risk's probability, including those related to the natures of terminology, projects, risks, estimating, and measuring. It defines four perceptual factors that can influence risk assessments and the types of bias that can affect the perception of risk probability. It also describes a two-step approach for managing sources of bias when assessing risk probability. It then overviews three groups of alternative a
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