Risk manager Christine is analyzing the risks faced by her company, Clear Sky Technology. She assigns a rating based on the significance of the consequences of the various risks. Her four ratings are: Low, Medium-Low, Medium-High, and High. The ratings that Christine assigns are a: A. Sensitivity analysis. B. Qualitative assessment. C. Scenario analysis. D. Quantitative assessment.
B. Qualitative assessment.
B. Qualitative assessment.
The ratings that Christine assigns are a qualitative assessment because she is using subjective judgment and expert opinion to determine the significance of the consequences of the various risks. The ratings are based on her assessment of the likelihood and impact of each risk, and are not based on quantitative data or mathematical models. Qualitative risk assessment is a common approach used by risk managers to identify, evaluate and prioritize risks. It is less precise than quantitative assessment but can be useful when quantitative data is not available or reliable.
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