How does qualitative risk assessment differ from quantitative risk assessment?

Qualitative risk assessment is characterized by its reliance on subjective judgment and the evaluation of risks based on descriptive categories rather than numerical values. This method often involves discussions, interviews, or brainstorming sessions to assess risks based on their likelihood and potential impact, using scales or rankings to express those judgments.

On the other hand, quantitative risk assessment utilizes numerical data and statistical analysis to determine the potential impact of risks, often converting those impacts into monetary values or probability figures. This approach provides a more measurable and objective assessment of risk, allowing for calculations such as expected loss, cost-benefit analysis, and return on investment.

The combination of subjective evaluation in qualitative assessment and the numerical focus of quantitative assessment highlights a fundamental difference between the two methodologies, making it crucial for organizations to choose the appropriate approach based on their specific context and needs. This distinction also clarifies why qualitative assessments may be seen as more exploratory and reflective, while quantitative assessments aim for precision and objective measurement.