Bridging the Gap Between Qualitative and Quantitative Risk Management

ERM historically has been a qualitative risk management technique. However, in this chapter, Integrated Risk Management (IRM) methods have been applied and interjected into this traditional ERM process. For instance, Likelihood and Impact measures, Total Risk Levels, Residual Risk Levels, and Mitigation Costs are all numerical values. These variables are applicable to each Risk Element in the Risk Register and are Risk Mapped throughout various Risk Segments in the organization. By doing this, we are now able to apply quantitative IRM risk analytics to these values such as tornado analysis, Monte Carlo Risk simulations, scenario analysis, heat maps, and other analytics.

For more details, please see Dr. Johnathan Mun’s book, Modeling Risk, Third Edition (Thomson–Shore). The book delves into these quantitative analytics that are beyond the scope of this current text.

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