  The project managers who deal with risk management are often faced with the
difficult task of determining the relative importance of the various sources of
risk that affect the project. This prioritisation is crucial to direct
management efforts to ensure higher project profitability. Risk matrices are
widely recognised tools by academics and practitioners in various sectors to
assess and rank risks according to their likelihood of occurrence and impact on
project objectives. However, the existing literature highlights several
limitations to use the risk matrix. In response to the weaknesses of its use,
this paper proposes a novel approach for prioritising project risks. Monte
Carlo Simulation (MCS) is used to perform a quantitative prioritisation of
risks with the simulation software MCSimulRisk. Together with the definition of
project activities, the simulation includes the identified risks by modelling
their probability and impact on cost and duration. With this novel methodology,
a quantitative assessment of the impact of each risk is provided, as measured
by the effect that it would have on project duration and its total cost. This
allows the differentiation of critical risks according to their impact on
project duration, which may differ if cost is taken as a priority objective.
This proposal is interesting for project managers because they will, on the one
hand, know the absolute impact of each risk on their project duration and cost
objectives and, on the other hand, be able to discriminate the impacts of each
risk independently on the duration objective and the cost objective.
