Describe the difference between qualitative and quantitative risk analysis.

The distinction between qualitative and quantitative risk analysis is centered on their approaches and methodologies. Qualitative risk analysis is primarily subjective; it involves evaluating risks based on their characteristics, such as likelihood and impact, often using descriptive terms and scales. This approach allows for a more flexible understanding of risks based on expert judgment or stakeholder input. In contrast, quantitative risk analysis is characterized by its reliance on numerical data and statistical methods. It aims to provide a more objective and measurable assessment of risks by utilizing tools such as probability distributions, calculations, and simulations to quantify potential impacts and likelihoods.

This understanding highlights why the choice emphasizing that qualitative analysis is subjective and quantitative analysis uses numerical methods is appropriate. Each method serves a purpose, with qualitative analysis being useful during the early stages of a project when risks are being identified, and quantitative analysis being valuable for detailed financial planning and decision-making processes later in project management.