What is the difference between qualitative and quantitative risk analysis?

The distinction between qualitative and quantitative risk analysis is primarily anchored in the methods used to assess and convey risk. Qualitative risk analysis relies on subjective judgment, where risks are evaluated based on the opinions, expertise, and experiences of individuals or teams. This approach often involves categorizing risks into levels of severity, likelihood, or impact using descriptors like high, medium, or low, rather than precise numbers.

Conversely, quantitative risk analysis employs numerical values to provide a more structured and data-driven framework for assessing risk. This method may involve calculating probabilities of risk events occurring and their potential impact on costs or schedules, allowing organizations to prioritize risks based on measurable data. By quantifying risks in financial terms, organizations can make more informed decisions regarding risk mitigation strategies.

In contrast to this correct distinction, the other options present misunderstandings. Focusing on financial impact does not capture the essence of qualitative versus quantitative analysis, as qualitative can also assess non-financial factors. Additionally, the assertion that qualitative analysis is less accurate is subjective; it's more about the nature of the information being evaluated. Lastly, both qualitative and quantitative analyses can utilize various tools, and automation is not inherently tied to one method over the other.