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4.1Risk identification & analysis
Covers identifying risks and recording them in a risk register, qualitative risk analysis (a probability/impact matrix) that ranks risks by multiplying probability and impact, and quantitative risk analysis (expected monetary value (EMV), decision trees) that translates risk into monetary terms to judge whether a response is worthwhile, building judgment for deciding which risks a limited contingency budget should be allocated to.
For a project manager (PM), the starting point of risk management is not "eliminate every risk," but judging which risks a limited contingency reserve should be allocated to, and how much, in order to reduce expected loss most efficiently. Preparing an equally thick response for every risk inflates cost, while underweighting risk leaves the team unable to act when a major risk materializes. This section covers the full flow from identifying and recording risks, through qualitative analysis that ranks them, to quantitative analysis (EMV) that verifies whether a response is monetarily worthwhile—framed around the practical goal of contingency-reserve allocation.
4.1.1Risk identification and the risk register
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