Semi-Quantitative Risk Assessment

Various methodologies are employed to identify, evaluate, and mitigate risks. Among these methodologies, semi-quantitative risk assessment combines elements of both qualitative and quantitative assessments. This article aims to provide an in-depth understanding of semi-quantitative risk assessment, its benefits, its application in various industries, and insights from the NIST 800-30 guidelines.

What is Semi-Quantitative Risk Assessment?

Semi-quantitative risk management is a hybrid approach that merges the qualitative aspects of risk evaluation with quantitative measures. This methodology uses a scoring system to evaluate the severity and likelihood of risks, providing a more structured and nuanced analysis compared to purely qualitative methods.

A qualitative or semi-quantitative risk assessment can be used when there is not sufficient data to undertake a fully quantitative risk analysis (QRA) or when a QRA is not warranted. 

Key Components of Semi-Quantitative Risk Assessment

1. Risk Identification: The first step involves identifying potential risks that could impact the project or organization. This can be done through brainstorming sessions, expert consultations, and reviewing historical data.
2. Risk Scoring: Each identified risk is scored based on two primary factors:
   • Likelihood: The probability of the risk occurring.
   • Impact: The potential consequence or severity if the risk materializes.
3. Risk Matrix: The scores for likelihood and impact are plotted on a risk matrix, often a 5×5 grid, which helps in visualizing the overall risk level. The matrix categorizes risks into different zones, such as low, medium, high, and extreme. This matrix, conforming to the guidelines provided in AS/NZS ISO 31000:2009, enables hazards to be quickly assessed and provides a comparison of risk levels between hazards, allowing significant hazards to be prioritized.
4. Risk Evaluation: Based on the risk matrix, each risk is evaluated to determine its priority. High-scoring risks require immediate attention and mitigation strategies, while lower-scoring risks may be monitored over time.
5. Risk Mitigation: Strategies are developed and implemented to reduce the likelihood and/or impact of high-priority risks. This may include preventive measures, contingency plans, and insurance.

Start Getting Value With
Centraleyes for Free

See for yourself how the Centraleyes platform exceeds anything an old GRC
system does and eliminates the need for manual processes and spreadsheets
to give you immediate value and run a full risk assessment in less than 30 days

Start Free Trial Now

Start Free Trial Now

Learn more about Semi-Quantitative Risk Assessment
Click Here

Quantitative vs. Qualitative Risk Assessment

• Qualitative Risk Analysis: This method is quicker and easier but relies on subjective judgments. It’s great for getting a fast overview of potential risks.
• Quantitative Risk Analysis: This approach is more detailed and objective. It involves numerical data and provides in-depth insights, such as setting aside contingency reserves and making go/no-go decisions. However, it takes more time, is more complex, and can be expensive.

Insights from NIST 800-30

Defining Likelihood

The NIST 800-30 guide clarifies that risk assessors do not define likelihood in a strictly statistical sense. Instead, they assign a likelihood score based on available evidence, experience, and expert judgment. This approach acknowledges that traditional probability theory may not always be practical or meaningful in risk assessments, especially when dealing with complex and uncertain environments.

NIST splits the likelihood of a cyber risk occurring into two parts:

1. Likelihood of Threat Event Initiation: The probability that a threat event will occur.
2. Likelihood of Adverse Impact: The probability that the threat event will result in an adverse impact.

This bifurcation helps in understanding that not all threat events lead to risk events, and it allows for a more nuanced analysis.

Evaluating Risk Impact

NIST uses qualitative and semi-quantitative scaling for impacts, similar to likelihood:

• Very high (10) = multiple severe or catastrophic events
• High (8) = 1 severe or catastrophic event
• Moderate (5) = a serious adverse effect
• Low (2) = a limited adverse effect
• Very low (0) = a negligible adverse effect

This scaling system, while aesthetically pleasing, has been criticized for its lack of logical consistency. For example, multiple catastrophic events should arguably have a score significantly higher than a single event, reflecting the compounded severity.

Challenges and Criticisms

One criticism of the semi-quantitative approach, highlighted in the NIST 800-30 guidelines, is the potential complexity and lack of clarity in the results. The methodology’s reliance on subjective judgments can lead to inconsistencies and difficulties in aggregating risks. Additionally, the absence of strict statistical rules might result in risk assessments that are perceived as less rigorous or precise.

NIST provides flexibility in determining overall likelihood, such as using the maximum, minimum, or weighted average of likelihood values, which can lead to different interpretations and potentially undermine the reliability of the assessment.

Summing it Up

Semi-quantitative risk assessment is a powerful tool for managing risks in a structured and effective manner. By combining the strengths of qualitative and quantitative approaches, it provides a comprehensive view of risks, facilitating better decision-making and improved risk management outcomes. However, it is essential to recognize its limitations and challenges, particularly regarding the subjective nature of likelihood and impact evaluations.

Whether in healthcare, construction, IT, environmental management, or process industries, this methodology is invaluable for identifying, evaluating, and mitigating risks to ensure the success and sustainability of projects and operations. By understanding and addressing the nuances highlighted by frameworks like NIST 800-30 and AS/NZS ISO 31000:2009, organizations can enhance their risk management practices and achieve more reliable and actionable results.