Definition:
A risk assessment approach that evaluates and prioritizes risks based on subjective factors such as likelihood, severity, and impact.
Key Components:
- Risk Probability Rating: Assessing how likely a risk is to occur.
- Impact Assessment: Determining potential project disruptions caused by risks.
- Risk Matrix: Categorizing risks based on severity and likelihood.
Use Cases/Industries:
- Oil & Gas: Identifying environmental risks in offshore drilling projects.
- Construction: Prioritizing safety hazards on a job site.
- Finance: Evaluating credit risk exposure for investments.
Advantages:
- Quick and Cost-Effective: Provides an initial risk assessment without complex data modeling.
- Helps Prioritize Risks: Focuses efforts on high-impact areas.
Challenges:
- Subjectivity in Ratings: Depends on expert judgment, which can vary.
- Lack of Numerical Data: Does not provide precise probability estimates.
Related Terms:
Risk Assessment Matrix, Risk Scoring, Impact Analysis
Example:
A renewable energy firm conducted qualitative risk analysis to rank potential regulatory and environmental risks before starting a new wind farm project.
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Synonyms:
Subjective Risk Evaluation, Risk Prioritization, Qualitative Assessment
