Which category of risk is typically classified as High, Medium, or Low?

Qualitative risk assessment is focused on determining the significance of risks based on their characteristics rather than numerical values. In this approach, risks are categorized as High, Medium, or Low based on subjective judgment, often drawing on expert opinions, past experiences, and the context of the specific environment. This classification allows organizations to prioritize their responses to risks based on potential impact and likelihood without needing detailed statistical analysis or precise measurements.

By using qualitative risk assessment, organizations can effectively communicate the level of risk to stakeholders and make informed decisions regarding risk management strategies. It is particularly useful in cases where data may be limited or where the risks are not easily quantifiable. This method helps in facilitating discussions around risk, planning, and resource allocation efficiently.

In contrast, quantitative risk assessment relies on numerical values and statistical methods to evaluate risks, often providing a clear financial representation of risk exposure. While inherent risk refers to the level of risk that exists in the absence of any controls, and residual risk refers to the risk that remains after controls are applied, these terms do not typically involve categorization into High, Medium, or Low as the qualitative method does.