Which technique is used to prioritize risks by probability and impact?

• A. Quantitative risk analysis using Monte Carlo
• B. Qualitative risk analysis using a risk probability and impact matrix
• C. SWOT analysis
• D. Sensitivity analysis

Answer: (B)

Prioritizing risks by probability and impact is done with a qualitative risk analysis using a risk probability and impact matrix. This approach looks at each identified risk and assesses two things: how likely it is to occur and how much impact it would have on project objectives if it did. By placing risks into a matrix that combines these two dimensions, you get a risk rating (for example, low, medium, high). This makes it clear which risks deserve the most attention and action, so mitigation efforts can be focused where they’ll matter most.

It’s qualitative, often based on expert judgment and predefined categories, which makes it quick and practical in early planning. It’s different from quantitative methods like Monte Carlo, which use numerical simulations to estimate overall risk exposure, or from sensitivity analysis, which identifies which inputs most influence a particular outcome. SWOT is a broader strategic analysis, not a method for ranking risks by probability and impact. A simple example: a risk with high probability and high impact becomes a top priority, while a risk with low probability and low impact is monitored with lower urgency.