For both quantitative and qualitative approaches, a wide range of techniques exist as illustrated in the chart below (please refer the American Bureau of Shipping (2000) for more details). Each technique has its own:
With the increasing availability of big data and sophisticated software analytics, such as machine learning, modern risk assessment are automated and easy to use for people who have limited technical knowledge on risk management. The outcome of risk assessment will become more accurate due to the access to large-size samples. For example, Deloitte has developed a continuous risk assessment tool as an enhancement of its traditional risk assessment processes through the inclusion of quantitative metrics i.e. key risk indicators, to better assess the risk universe. ORM has moved away from traditional risk assessment towards risk-based strategic decision making.
Our Market Researcher, Jiaqi Sun, has put together research to provide an overview of commonly-used risk assessment approaches and processes to manage hazard, operational and strategic risks. Over the next series of blogs, we will drill down into: