David is the project manager of HGF project for his company. David, the project team, and several key stakeholders have completed risk identification and are ready to move into qualitative risk analysis. Tracy, a project team member, does not understand why they need to complete qualitative risk analysis. Which one of the following is the best explanation for completing qualitative risk analysis?

A.
Qualitative risk analysis helps segment the project risks, create a risk breakdown structure, and create fast and accurate risk responses.

B.
It is a cost-effective means of establishing probability and impact for the project risks.

C.
All risks must pass through quantitative risk analysis before qualitative risk analysis.

D.
It is a rapid and cost-effective means of establishing priorities for the plan risk responses and lays the foundation for quantitative analysis.

Explanation:

Of all the choices this is the most accurate. Qualitative risk analysis is fast and cost effective and it helps establish risk priorities for responses.
Qualitative almost always precedes quantitative analysis.
Qualitative Risk Analysis uses the likelihood and impact of the identified risks in a fast and cost-effective manner. Qualitative Risk Analysis establishes a basis for a focused quantitative analysis or Risk Response Plan by evaluating the precedence of risks with a concern to impact on the project’s scope, cost, schedule, and quality objectives. The qualitative risk analysis is conducted at any point in a project life cycle. The primary goal of qualitative risk analysis is to determine proportion of effect and theoretical response. The inputs to the Qualitative Risk
Analysis process are:

Organizational process assets
Project Scope Statement
Risk Management Plan
Risk Register

Answer option B is incorrect. While this statement is true, it does not answer the question fully.

Answer option C is incorrect. Quantitative risk analysis happens after qualitative risk analysis.

Answer option A is incorrect. Qualitative risk analysis does not segment the project risks or create a risk breakdown structure. It can, however, help identify risk responses.

Reference: "Project Management Body of Knowledge (PMBOK Guide), Fourth Edition"