What approach uses numerical values to assess risk?

The approach that uses numerical values to assess risk is Quantitative Risk Assessment. This method quantifies risk in terms of numerical expressions, such as probabilities and monetary values. By applying statistical techniques and mathematical models, it allows organizations to evaluate the potential financial impact and likelihood of different risks occurring.

Quantitative Risk Assessment often uses historical data and metrics to calculate metrics like expected loss, which provides a clearer understanding of the risks in numerical terms. This precision helps decision-makers prioritize risks and allocate resources more effectively. In contrast, qualitative assessments typically use descriptive categories rather than numerical values, making them less precise in some contexts.

This numeric focus in Quantitative Risk Assessment is particularly beneficial for organizations that require strict financial accountability or have a need to analyze risk in quantitative terms for strategic planning and budgeting purposes.