Qualitative risk analysis: some problems and remedies

Abstract

Purpose

The article sets out to discuss and present a solution to the fact that various qualitative risk analyses of the same problem can reach significantly different conclusions.

Design/methodology/approach

By reviewing a common risk analysis approach and identifying where the possible problems arise, the authors propose ways to overcome the problems based on what they have found in the literature in general.

Findings

There are ways to greatly reduce the problems, but this requires a risk analysis approach in which information quality and consistency are the subject of greater focus.

Research limitations/implications

The definitions used, Monte Carlo methods and the analytical hierarchy process are well tested in countless applications. Hence, the authors believe that this work possesses no major limitations.

Practical implications

The approach has only been applied to theoretical situations; real‐life situations are needed to address possible practical limitations.

Originality/value

The paper illustrates the importance of distinguishing between “uncertainty”, “risk” and “capabilities” and the associated implications. It also shows how this can be done in a logically consistent way using the analytical hierarchy process so that the problem of inconsistency is reduced, and how the analysis can be used to systematically improve itself. The proposed risk analysis is a novel approach that has, to the authors' knowledge, never been thought of before.

Citation

Emblemsvåg, J. and Endre Kjølstad, L. (2006), "Qualitative risk analysis: some problems and remedies", Management Decision, Vol. 44 No. 3, pp. 395-408. https://doi.org/10.1108/00251740610656278