What is a key difference between qualitative and quantitative risk assessment?

The identification of qualitative risk assessment as primarily based on judgment and the characterization of quantitative risk assessment as relying on numerical values effectively captures the core distinction between these two methodologies.

Qualitative risk assessment involves evaluating risks based on descriptive and non-numerical factors, such as expert opinion, historical data, and the likelihood of events occurring, which allows for a broader understanding of risks that may not be easily quantified. This approach often requires subjective analysis, as it takes into consideration the potential impact of risks based on experiences and insights rather than strict mathematical calculations.

On the other hand, quantitative risk assessment involves measuring risk using numerical values and statistical methods. This allows for a more precise and objective evaluation, as risks can be expressed in terms of probabilities, financial impacts, and other quantifiable metrics. Quantitative assessments provide a framework for comparison and prioritization of risks based on data-driven insights.

By highlighting that qualitative is judgment-based and quantitative is numerical, this answer clarifies the fundamental characteristics that differentiate these two approaches to risk assessment, thus facilitating a better understanding of how they can be used in different contexts within risk management practices.