A risk manager has decided to use likelihood and consequence to determine the risk of an event occurring to a company asset. Which of the following is a limitation of this approach to risk management?

Question

Options

• ASubjective and based on an individual's experience.
• BRequires a high degree of upfront work to gather environment details.
• CDifficult to differentiate between high, medium, and low risks.
• DAllows for cost and benefit analysis.
• ECalculations can be extremely complex to manage.

• A
  77% (23)
• B
  7% (2)
• C
  13% (4)
• E
  3% (1)

Explanation

Using likelihood and consequence to determine risk is known as qualitative risk analysis. With qualitative risk analysis, the risk would be evaluated for its probability and impact using a numbered ranking system such as low, medium, and high or perhaps using a 1 to 10 scoring After qualitative analysis has been performed, you can then perform quantitative risk analysis. A Quantitative risk analysis is a further analysis of the highest priority risks during which a numerical or quantitative rating is assigned to the risk. Qualitative risk analysis is usually quick to perform and no special tools or software is required. However, qualitative risk analysis is subjective and based on the user's experience.

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