What does quantitative risk analysis primarily assess?

Quantitative risk analysis primarily focuses on the numerical assessment of risk using statistical data. This approach allows for the measurement of risks in more concrete, mathematical terms, enabling risk managers to calculate potential losses and the likelihood of various risk scenarios. By utilizing historical data, statistical methods, and mathematical models, quantitative analysis helps in identifying, evaluating, and prioritizing risks based on their potential impact.

This method is valuable for decision-makers as it provides a framework for basing decisions on clear, numerical evidence rather than subjective judgments. When conducting quantitative risk analysis, practitioners might use tools such as simulations, sensitivity analysis, and probability distributions to quantify risks and understand their implications in a way that supports informed decision-making.