“Risk analysis refers to systematic utilization of information available to find out how frequent specified events may come to pass and the management of the aftermaths.”(Winston)
1) Differences between Quantitative and qualitative risk analysis
v Qualitative risk analysis has the advantage of allowing for assessment of the magnitude of impacts that now make the analysis of cost benefit to be possible while on the other hand the qualitative risk analysis fails to provide specific quantifiable assessment of impacts magnitude making it impossible to analysis the cost benefit.
v Quantitative risk analysis involves the use of complex calculation of parameters like the exposure factor probability and frequency of occurrence, uncertainty, exposure factor, annual loss and so on. These calculations aside being complex will demand good explanation. They are usually consistent, more reliable and repeatable. Qualitative risk analysis on the other hand rarely involves calculation. However if calculation is involved, they are usually simple and uncomplicated(Risk analysis and assessment)
v Quantitative analysis demand a lot of effort and doing it manually could even require about twenty times efforts needed were automated tools have been utilized. While the qualitative risk analysis require less time and efforts.
v Quantitative analysis is based on objective numerical values while the quantitative approach makes use of descriptive but immeasurable values.
v While there is frequency of threat for the quantitative risk analysis, there is no annual loss expectance(ALE) in case of Qualitative risk analysis
2) Specific condition in which each of qualitative and quantitative analysis can be used
Ø Quantitative risk analysis will be valuable in a situation in which an estimate and not probability data is enough to identify and prioritize risk events. This qualitative placement and ranking of likely risk events affords the opportunity to fashion out risk management plans based on the understanding of events
Ø Quantitative risk analysis is useful in a situation when numerically based proof of certain risk is compulsory by utilizing estimating tools. Risk quantification helps to get a sound basis and premise for decision making
3) Appropriate analysis for the customer system project
For the customer service system project, the quantitative risk analysis will be preferred. Why? This is because this is a project with time frame and a certain budget that is allocated to it. Quantitative risk analysis will therefore help to find out if the project will be completed within the timeframe and within the budget allocated to it. It also helps to identify the important project parameters that one way or the other affects the project schedule. It gives analysis in terms of how identified risks will affect the aims and objectives of the customer service system project.
Risk analysis and assessment.
Retrieved on August 1, 2009 from http://www.dir.state.tx.us/pubs/practices/word/j2.doc
Winston, W. Risk Analysis
Retrieved August 1, 2009 from www.palisade.com/Risk/risk-analysis.asp.