What is the difference between qualitative and quantitative risk assessment?

The distinction between qualitative and quantitative risk assessment primarily lies in their nature of evaluation. Qualitative risk assessment is inherently subjective, relying on personal judgment, opinions, and experiences to assess risks. It aims to categorize and describe risks based on their characteristics, often using descriptive scales such as high, medium, or low. This method enables teams to discuss risks in a way that appreciates context and nuance, which can be critical when numerical data may be limited or less informative.

On the other hand, quantitative risk assessment adopts an objective stance, focusing on measurable, numerical data. It involves statistical methods to calculate risk probabilities and impacts, allowing for a more definitive and quantifiable approach. This objectivity facilitates comparison across risks and supports data-driven decision-making.

The other options do not accurately capture the core differences between qualitative and quantitative assessments. While qualitative assessments can address various types of risks beyond just financial aspects, and quantitative assessments typically incorporate both likelihood and impact into their analyses, the essence of qualitative being subjective and quantitative being objective remains the pivotal distinction.