How does qualitative risk analysis differ from quantitative risk analysis?

Qualitative risk analysis is characterized by its subjective nature, relying on personal judgment and insights to assess risks and their potential impacts. This approach often involves the use of descriptive categories to evaluate the likelihood and consequences of risks, which may include expert opinions, stakeholder discussions, and brainstorming sessions. It allows for a comprehensive understanding of the situation, particularly in scenarios where data may be scarce or difficult to quantify.

On the other hand, quantitative risk analysis is data-driven and employs mathematical and statistical methods to measure risk. This method utilizes numerical data and formulas to calculate probabilities, financial impacts, and other measurable factors, allowing for more precise risk assessments. It often involves simulations or modeling to predict the potential outcomes based on historical data and current trends.

The other options, while discussing various characteristics, do not accurately capture the fundamental difference between the two methodologies. For instance, the focus on mathematical models and subjective judgment is reversed in the first option, while the second option inaccurately describes the focus areas of each type of analysis. The fourth option confuses the nature of simulations with market scenarios rather than clearly delineating between subjective and data-driven assessments. Thus, the distinction where qualitative is described as subjective and quantitative as data-driven is the most accurate characterization.