Risk Assessment
Understanding Risk Assessment
Risk assessment enables corporations, governments, and investors to assess the probability that an adverse event might negatively impact a business, economy, project, or investment. Risk analysis provides different approaches investors can use to assess the risk of a potential investment opportunity. Two types of risk analysis an investor can apply when evaluating an investment are quantitative analysis and qualitative analysis.
A quantitative analysis of risk focuses on building risk models and simulations that enable the user to assign numerical values to risk. An example of quantitative risk analysis would be a Monte Carlo simulation. This method—which can be used in a variety of fields such as finance, engineering, and science—runs a number of variables through a mathematical model to discover the different possible outcomes.
A qualitative analysis of risk is an analytical method that does not rely on numerical or mathematical analysis. Instead, it uses a person’s subjective judgment and experience to build a theoretical model of risk for a given scenario. A qualitative analysis of a company might include an assessment of the company’s management, the relationship it has with its vendors, and the public’s perception of the company.
At VRC our professional team help the client in developing its objective and develop a risk management structure that will allow the client to flourish in unstructured situations blurred by major uncertainties.