What is Risk Analysis
Risk analysis can divided into two components:
(1) risk assessment which identifies, evaluates, and measures the probability and severity of risks and
(2) risk management which involves making decisions about what to do about risks.
Quantitative risk analysis (also called probabilistic risk assessment) seeks to numerically assess probabilities for the potential consequences of risk. It is used in areas such as actuarial science, climate change, health risks, food safety and security.
Qualitative risk analysis is used when there is an absence of precise values for likelihood and consequences. It uses broad terms such as moderate, severe, catastrophic to identify and evaluate risks or presents a written description of the risk. Qualitative risk analysis uses models such as the risk matrix to determine a broad classification of risk level. However, these models have been criticized because, while they have the appearance of being rigorous, they do not obey mathematical rules and may not correctly rank risks.
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