Why quantitative assessments are superior to qualitative.
It is widely accepted that two key components of risk events are likelihood and consequence. Measuring these two components can generally be done through three type of risk assessments; qualitative, semi-quantitative or quantitative. An example of the former might be 'very poor, poor, average, good or excellent', and result in ratings such as ‘high, medium or low’. The latter may be represented by a scale of '1 to 5', and produce numerical outcomes. Semi-quantitative assessments combine the two, typically with qualitative criteria (‘likely, rare’, or ‘major, minor’) leading to quantitative assessments (0.01, 10).
Social and environmental business risks have traditionally been assessed using qualitative methods. This is despite the majority of business decisions being made through financial lens. Depending on the business aspect being assessed, all forms have their advantages and disadvantages. However, tools have recently been developed to enable quantitatively assessments of previously 'unquantifiable' or 'intangible' risks.
Generally qualitative methods are more useful for initial, 'broad-brush' level assessments. They are usually able to be undertaken rapidly, and are often therefore cheaper. Users are provided with a basic understanding of the comparative levels of risk between various outcomes. But there are numerous problems with qualitative assessments. These include an inability to link outputs to decisions through financial metrics. They are also typically framed with loaded, imprecise terms, such as ‘rare’ or ‘catastrophic’. Qualitative methods essentially form the first pass of a thorough risk assessment, in that they may provide an initial indication of which outcomes are or are not acceptable.
Semi-quantitative assessments improve the precision in which criteria can be formed and events assessed. Like qualitative assessments they are simple to develop and apply, and rely on less emotive language. And they do allow for events to be described in numerical (and potentially financial) terms. However the still present issues with differentiation between risk events. Picture an outcome that is rated as ‘5’, through being a product of very high consequence (5) and very low likelihood (1). The outcome of ‘5’ mirrors that of another event which may be very low consequence (1) and very high likelihood (5).
The most rigorous form of risk assessments are quantitative. Likelihoods can be developed from real frequencies. Consequences can be produced through consistent measurements. These criteria can be used to produce a ‘risk quotient’, or ‘expected cost’ in monetary terms. Insurers use similar methods in order to calculate the premiums that they charge customers. They are able to spread risk across their customer base, which is the same as spreading exposure over a long period of time.
Workplace health and safety is one of those areas, like all aspects of business, built on risk. Categorising investments through financial terms, particularly when involving injuries or deaths, is a method fraught with danger. However when assessments are conducted systematically and consistently, risk events can be appropriately compared, and defendable decisions can be made based on evidence. Health and safety professionals and practitioners must develop capabilities to firstly quantify risk events, and secondly to elucidate risk profiles and targeted risk treatment options.
Through using quantitative risk assessments, one can formulate a business risk profile. Providing that a systematic approach is adopted, even previously unquantifiable events can be included. Risk events can then be ranked and compared, so that the highest risk outcomes can be targeted for treatment. It is through prudent, rigorous methods like this that rare business funds are best spent. By subsequently lowering the business risk profile through considered, effective controls, businesses can realise demonstrable savings. Quantitative risk assessments, when done properly, represent sound investments.
Contact us at Heinrichs Safety for workplace health and safety risk assessment advice, support and guidance.