What is the difference between qualitative and quantitative risk assessment?

The distinction between qualitative and quantitative risk assessment lies in the methods used for evaluating risks. Qualitative assessment primarily relies on subjective judgment and the experience of experts to identify and classify risks. This approach often includes discussions, interviews, and the use of non-numerical data to understand the potential impacts and likelihoods of various risks. It helps in prioritizing risks based on their severity and the likelihood of their occurrence.

On the other hand, quantitative risk assessment employs numerical data and statistical methods to measure and analyze risks. This method provides a more objective approach, as it involves data analysis, modeling, and calculations to derive metrics such as probabilities and financial impacts. This enables organizations to make decisions based on measurable and comparable data, which is particularly useful in resource allocation and risk mitigation strategies.

In summary, the correct answer highlights that qualitative assessments are based on subjective evaluations, while quantitative assessments depend on objective, numerical data. This fundamental difference impacts how organizations manage and respond to risks.