Risk Analysis - Qualitative
Qualitative risk analysis is the process of assessing the likelihood and impact of identified risks. It may be expressed in such subjective terms as “high, medium and low.” Risk analysis starts with the identified risks, then ranks and prioritizes them. This process guides your selection of appropriate responses to each risk. Ongoing risk analysis helps identify risk trends.

The probability/impact matrix
The probability/impact matrix is a standard tool for evaluating project risks. One axis of the matrix represents the probability that a given risk will occur; the other axis represents the impact on project objectives if that risk were to occur.

It is most important that your organization determines the threshold of risk that can be tolerated. This determines specific combinations of probability and impact that define high risk (red light), moderate risk (yellow light) and low risk (green light). The risk score helps put the risk into a category that will guide risk response actions.