Qualitative risk assessment is a method of risk assessment that relies on subjective judgments, opinions, and experiences of experts, stakeholders, or team members to evaluate the likelihood and severity of risks. Qualitative risk assessment does not use numerical values or probabilities to measure risks, but rather uses descriptive scales, such as high, medium, or low, or color codes, such as red, yellow, or green. Qualitative risk assessment is often used when there is limited data, time, or resources to conduct a quantitative risk assessment, or when the risks are complex, uncertain, or intangible.
Qualitative risk assessment is like asking your gut feeling about the likelihood and impact of risks, instead of crunching numbers and probabilities. It's like deciding whether to bring an umbrella based on the cloudiness of the sky, rather than checking the exact percentage of rain forecast.
Qualitative risk assessment has some advantages over quantitative risk assessment, such as being simpler, faster, and cheaper to perform. It can also capture human factors, such as perceptions, emotions, or preferences that influence risk decisions and behaviors. Additionally, the approach can accommodate diverse perspectives and opinions from different sources and stakeholders to enhance communication and collaboration. Moreover, it is useful for evaluating risks that are difficult to quantify or measure, such as reputation, culture, or ethics.
Qualitative risk assessment is like having a quick and dirty way to gauge risks, without getting bogged down in complex calculations. It's like using a traffic light system (red, yellow, green) to prioritize risks, which can help facilitate communication and collaboration among stakeholders – just like how traffic lights help coordinate drivers on the road.
Qualitative risk assessment has its benefits, but it is also subject to biases, errors, and inconsistencies due to subjective judgments. It is challenging to compare and aggregate risks across different scales or categories since there is no common metric or standard. Furthermore, it is not precise or accurate as it does not provide numerical values or probabilities. Additionally, it may not reflect the true magnitude or complexity of risks as it may oversimplify or overlook some factors that affect risks.
Qualitative risk assessments do not sufficiently account for the severity of individual risks when a multitude of risks are being considered. For example, stating that 5 different risks identified are high could lead to them being given equal attention when in reality some may supersede others in precise severity.
To address the challenges of qualitative risk assessment and improve its quality and reliability, you can follow some best practices. Start by defining clear and consistent criteria and scales for assessing and ranking risks, and ensure that all participants and stakeholders are aware of them. Utilize multiple sources and methods of data collection and analysis, such as surveys, interviews, workshops, or brainstorming sessions, to gather comprehensive information about risks. Additionally, validate and verify the results of qualitative risk assessment with other data, evidence, or experts to identify any gaps, errors, or biases in the risk evaluation and prioritization. Finally, review and update the qualitative risk assessment regularly and monitor any changes or trends in the risk environment or context.
Qualitative risk assessment is not a standalone method, but rather a part of a broader contingency planning process. As such, it should be integrated with other steps and activities of contingency planning, such as establishing objectives, scope, and boundaries of the process; developing and documenting plans and strategies for each risk category or scenario; testing and exercising plans and strategies; and revising them based on the feedback from the testing phase. Additionally, key roles and responsibilities of the contingency planning team and stakeholders should be identified. The actions, resources, and timelines required to implement the plans should also be defined.
As Enterprise Architects, we should also consider the cultural and cognitive factors that influence how risks are perceived and managed in the organization. It's like being aware of the "hidden flavors" and "secret ingredients" that shape the risk culture and decision-making processes – such as the level of trust, transparency, and accountability among stakeholders, or the mental models and heuristics that people use to simplify and cope with uncertainty. By surfacing and addressing these underlying factors, we can create a more resilient and adaptable organization that can weather any storm or spicy challenge.