Quantitative risk assessment (QRA) software and methodologies give quantitative estimates

of risks, given the parameters defining them. They are used in the financial sector, the
chemical process industry, and other areas. In financial terms, quantitative risk assessments
include a calculation of the single loss expectancy of monetary value of an asset. In the
chemical process and petrochemical industries a QRA is primarily concerned with
determining the potential loss of life (PLL) caused by undesired events. Specialist software
can be used to model the effects of such an event, and to help calculate the potential loss of
life. Some organisations use the risk outputs to assess the implied cost to avert a fatality
(ICAF) which can be used to set quantified criteria for what is an unacceptable risk and what
is tolerable.

Qualitative risk analysis is a project management technique concerned with discovering the
probability of a risk event occurring and the impact the risk will have if it does occur. All risks
have both probability and impact. Probability is the likelihood that a risk event will occur, and
impact is the significance of the consequences of the risk event. Impact typically affects the
following project elements: schedule, budget, resources, deliverables, costs, quality, scope,
performance.

Qualitative Risk Analysis A qualitative risk analysis prioritizes the identified project risks using
a pre-defined rating scale. Risks will be scored based on their probability or likelihood of
occurring and the impact on project objectives should they occur. Probability/likelihood is
commonly ranked on a zero to one scale (for example, .3 equating to a 30% probability of the
risk event occurring). The impact scale is organizationally defined (for example, a one to five
scale, with five being the highest impact on project objectives - such as budget, schedule, or
quality). A qualitative risk analysis will also include the appropriate categorization of the risks,
either source-based or effect-based. Quantitative Risk Analysis A quantitative risk analysis is
a further analysis of the highest priority risks during a which a numerical or quantitative rating
is assigned in order to develop a probabilistic analysis of the project. A quantitative analysis:
- quantifies the possible outcomes for the project and assesses the probability of achieving
specific project objectives - provides a quantitative approach to making decisions when there
is uncertainty - creates realistic and achievable cost, schedule or scope targets In order to
conduct a quantitative risk analysis, you will need high-quality data, a well-developed project
model, and a prioritized lists of project risks (usually from performing a qualitative risk
analysis)
Summary:
Qualitative: risk-level
Quantitative: project-level
Qualitative: subjective evaluation of probability and impact
Quantitative: probabilistic estimates of time and cost
Qualitative: quick and easy to perform

Quantitative: time consuming

Qualitative: no special software or tools required
Quantitative: may require specialized tools

Many authors make the distinction between the two types of risk analyses very complicated,
but the difference is really very simple. Quantitative Risk Analyses assign fixed numerical
values (within a margin of error) to both the probability and utility (business impact) of an
outcome; Qualitative Risk Analyses dont. Instead, they represent both the probability and
utility of an outcome using an interval scale, where each interval includes a range of
numerical values (beyond the margin of error) and each interval is typically represented by a
non-numerical label (such as the words High, Medium, Low), not the ranges of values
those labels represent.

Scenario building can be described as a story which is based on the analysis and
understanding of current and historic trends and events. It includes a consistent description
of possible future situations. The development of sets of narrative scenarios helps to identify
possible pathways towards a vision of the future. Scenario building can be done by an
individual or by a stakeholder group and should focus on the main issues covered by the
vision.