To successfully perform a risk assessment one needs to quantify the known risks. It is all about being prepared. People invest in gold and silver as a way to protect themselves from a falling stock market and inflation, and businesses need to invest in preparing for what could become their show stopper.

There are numerous risks that occur in a business or project that could cause a delay in meeting a deadline or potentially derail their operations all together. By quantifying the risk you can, to the best of your ability, prepare for these circumstances. By being prepared you avoid the sucker-punch effect. This doesn't mean you don't still get hit, or even fall down, it just means that you have taken into account the 'what could be' and the result is a 'not as bad as it could have been' situation.

Because there are so many risks to take into account, such as a key individual quitting their job who is part of a project, to experiencing a natural disaster or terrorist attack, quantifying the risk allows the assessor to prioritize which risks require some sort of action to occur to help minimize the impact and which risks can be excluded from concern.

Great response. Realizing limited resources are the key. All companies are working with reduced resources, especially staff, and by quantifying risk it doesn't just allow the business to determine the monetary value of a project, though this is truly what it all comes down to, but also the most important functions and processes that a business is dependant upon to recover first in a recovery situation. This weighting also is used as a gauge for proper allocation of capital and determining an exceptable return on investment.

I agree with jeff quantifying risk will help more for allocation of project budget with minmum tolerance wasting resource and to be prepared for the risk that about yet to come ,lets face it we can not 100 % mitigate risk but if we quntify the risk  assessment we have at least some level of understanding what each level of risk assessment means and the ability to compare them.Moreover its easier for some decision makers rather than dealing with risk or no risk option to have some sort of method or tools that help them to compare whcih is what and what is which becuase we know that it's alwyas a Question that "HOW BAD IT IS" neet to be  deciphered

The ability to quantify risk is essential for numerous reasons. Business decisions are based on risks. Some risks reap huge rewards, while some risks are too great for the reward they offer. We need the ability to quantify this risk into a format that is easily understood and relevant through all parts of a risk analysis.

Without the ability to quantify risk you cannot accurately gauge it. Quantifying risk allows you to assign risk a physical value that provides us the ability to make educated decisions related to business. Although the values we assign risk may differ slightly because it is subject to interpretation, not quantifying risk would be irresponsible and lead to poor business decisions.

Without the quantification of risk, decisions would not be based on numbers and facts, but on each person’s interpretation of the partially completed risk analysis. Senior level management needs this information and relies on the people under them to provide it in the condensed format of a number. Each number can represent hundreds of pages of data; each risk is calculated and assigned a numeric value. Senior Level management may not have time to read an entire report, but may only care to read the summary of a risk’s value. This process is essential for making educated decisions and having a company that functions efficiently.

Well said Mr. Kimmel

I would have to agree that it is unlikely that that many of the individuals privy to the report will read it in its entirety.  I don’t believe this would occur because they are lazy. It just seems reasonable that most people are interested in the more tangible data.  Once they find out what the risks are, they probably want to see the monetary or operational impact those risks may have.  After that, they’ll probably be interested to see the method and cost of mitigation.  Numbers provide greater meaning. It’s just that simple. 

That’s not to say that the remainder of the analysis/assessment is fluff or irrelevant, but it’s safe to say that most people are interested in the end result. 

Inquiring minds want to know…  Are we at risk?... If so, how much?... Can we afford to mitigate it and still make a profit?

I am in agreement with Jeff that the process of risk quantification is the business equivalent of alchemy! The actuarial science by which complex mathematical algorithms consisting of statistics, probability and almanac mysticism come together, LOL.

As subjective as it may be the very process of quantifying risk helps to reduce risk by making decision makers aware of potential pit falls. The risk quantification metrics is akin to an infinite game of russian roulette which by itself can be exhausting and can serve to paralyze the initial benefits of risk quantification due to paralysis of analysis.

Quantifying risk is not an end in itself, but a worthy excercise which is a means to a better end!

Coming from a non-profit organization, I see quantifying risk as not only important but a necessity. Establishing a qualitative risk assessment will help establish a list of risks or threats, then assign a priority as to which are low to high levels of impact with their respective probabilities of occurrence. Once this is done, focus can be aimed at the risks of interest. In a business money needs to be spent wisely and in the right places. A quantitative assessment will give a more granular, detailed picture, not just a "these are important, and we don't need to worry about those".  A quantitative assessment can show the number of times a threat has occurred, damage suffered, money needed to mitigate and safeguard against them, and which actions are feasable. Having such detailed information will please management, making them feel warm inside knowing their money was well spent and made the right decisions to protect their business and investment.