A quantitative risk assessment (QRA) estimates vulnerability of various possible events expressed through a numerical value based on a combination of historical data and expert knowledge. The QRA fills the vacuum over qualitative analysis significantly to a higher level of assessment through application of appropriate deterministic and probabilistic methods, such as:
- Adopting various quantitative models individually or in combination that suit your specific requirements, and
- A comprehensive review of source of input data, data confidentiality, and model validation, i.e., verification and validations (based on availability).
A primary feature of the QRA is validation ‘accuracy’. This measure the predictable assessment of risk and actual desired outcome involving a ‘best guess’ estimation practice. Consequently, a multi risk assessment is performed based on multi-factor analysis to measure the uncertainty associated at different levels of abstractions. Eventually, the QRA helps decision-making quantitatively to prioritize various events based on the criticality of susceptibility in the real time use-cases.
In fact, QRA studies are progressively being used for an economical, safe, and competent architectural design, process, and upkeep of complex financial systems. QRA models are routinely adopted to assess the risks stemming from globalization and increasingly competitive market demands and used to develop new methodologies that address risk-informed support systems aligned with artificial intelligence and machine learning techniques. This forms an integrated framework approach to address various stakeholders adequately in a holistic manner.
In simple terms, the QRA provides decision makers crucial decision making abilities/insights that with greater risk awareness and expected outcomes ultimately lowering uncertainty and reducing the ongoing operating costs of the business.
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