In part 1 of this series, I briefly covered quantitive risk measuring – assigning a numeric value to risk, like “$3,500”, rather than a qualitative label like “medium” – only to quickly recommend against trying it. In this final sidebar, I want to come back to this topic. I’ll spend a bit more time explaining what I see as the pros and cons of quantitative risk measurement – why you might or might not want to use numeric values over more simple risk matrixes.

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Jacob Kaplan-Moss

The post revisits quantitative risk measurement, discussing its benefits and drawbacks compared to qualitative risk analysis. Quantitative analysis offers more precision and better ROI calculation but requires significant skill and effort. Despite its advantages, it can lead to analysis paralysis if not executed properly. Qualitative labels, while easier, often lack context and can hinder risk communication and decision-making. The author advises against starting with quantitative methods due to their complexity, suggesting they are more suitable for advanced practitioners.

Sidebar #4: Quantitative Risk Revisited

What problems arise with qualitative risk measurement?

Why might you use quantitive risk analysis?