What is the main difference between qualitative and quantitative risk assessments?

The main distinction between qualitative and quantitative risk assessments lies in their approach to evaluating and conveying risks. In qualitative assessments, risks are described using non-numerical or descriptive terms, often categorized by severity or likelihood without assigning specific numerical values. This approach allows for a narrative assessment of risks, making it easier to understand and communicate complex risk scenarios in a way that is accessible to stakeholders who might not be as familiar with numerical data.

On the other hand, quantitative risk assessments rely on numerical data and statistics to evaluate risks, providing a more precise measure of likelihood and impact. This method often involves calculations, such as potential financial losses or probabilities, making it more suitable for decisions that require a monetary or tangible measure of risk.

The descriptive nature of qualitative analysis enables it to capture aspects that may not be quantifiable, such as reputational risks or operational impacts, while quantitative analysis offers a clear numerical perspective beneficial for decision-making when specific data is available. Each method has its strengths, but the correct answer specifically highlights the fundamental difference in how risks are articulated between these two types of assessments.