What is the difference between qualitative and quantitative risk assessments?

The distinction between qualitative and quantitative risk assessments is primarily based on the methods and metrics used to evaluate risks. Qualitative assessments rely on descriptive terms and categorizations to appraise risks, emphasizing the identification and analysis of potential impacts through non-numerical data. Such assessments typically incorporate expert opinions, stakeholder interviews, and scenario analysis to gauge risks in a more subjective manner.

In contrast, quantitative assessments focus on numerical metrics and statistical techniques to evaluate risks, offering measurable and objective data. They often involve calculations based on historical data, cost analysis, and probabilities that allow for a more precise understanding of risk levels, such as determining the monetary impact of certain risks or calculating the likelihood of certain events occurring.

Thus, the correct answer highlights that qualitative assessments are characterized by their reliance on descriptive terms, while quantitative assessments are defined by their use of numerical metrics. This clarity in methodology is essential for managers tasked with understanding and mitigating risks within an organization.