Qualitative analysis techniques rely on descriptive data, expert judgment, and subjective assessments, making them useful for certain contexts but potentially limited in precision.
* Limitations of Qualitative Analysis:
* Subjectivity: Results may vary depending on the perspective and experience of the individuals conducting the analysis.
* Precision: Lack of numeric data may result in less accurate estimations compared to quantitative methods.
* Strengths of Qualitative Analysis:
* Useful in scenarios where data is unavailable or events are too complex for numerical evaluation.
* Provides insights into risks, rewards, and compliance in terms of likelihood and severity.
* Why Other Options Are Incorrect:
* A: Qualitative analysis does not inherently lead to incorrect conclusions; its accuracy depends on its application.
* B: Qualitative methods are widely applicable in risk and reward analysis.
* D: It is not limited to compliance-related risks.
References:
* ISO 31000 (Risk Management): Explains the role of qualitative methods in risk assessments.
* COSO ERM Framework: Discusses qualitative and quantitative analysis in decision-making.