What is the difference between qualitative and quantitative risk analysis?

Qualitative risk analysis focuses on assessing risks through subjective assessments, which often includes the opinions and experiences of team members to identify and evaluate risks based on their likelihood and impact. This type of analysis typically involves categorizing risks as low, medium, or high and uses tools such as risk matrices. The qualitative approach does not rely on numerical data but rather emphasizes understanding the nature and significance of risks in a more focused and descriptive manner.

In contrast, quantitative risk analysis utilizes numerical data to evaluate risk. It is often more time-consuming and thorough, as it involves calculations, statistical analysis, and financial implications. The qualitative approach is about understanding the risk landscape based on human judgment, allowing organizations to prioritize issues for further analysis or response without delving into detailed numerical assessments. This makes it an effective preliminary step in risk management and decision-making.