Certified Supply Chain Professional (CSCP) Practice Exam

What is the main purpose of performing a qualitative risk assessment?

1. To quantify financial impacts

2. To analyze potential risk events qualitatively

3. To prioritize risks based on their likelihood and impact

4. To develop risk response options

The correct answer is: To prioritize risks based on their likelihood and impact

The main purpose of performing a qualitative risk assessment is to prioritize risks based on their likelihood and impact. In this type of assessment, risks are evaluated qualitatively rather than quantitatively, allowing organizations to understand which risks could have the most significant effects on objectives and operations. By assessing the probability of risk events occurring and their potential consequences, decision-makers can concentrate their resources and attention on the most critical risks that need management or mitigation strategies. This process enables businesses to create effective risk management plans by addressing the highest priority risks first, thereby enhancing overall risk management and ensuring that resources are allocated efficiently. The qualitative assessment often lays the groundwork for more detailed quantitative analysis when necessary. While analyzing potential risk events qualitatively contributes to this process, which focuses on describing and understanding risks rather than numerically measuring them, prioritization remains the core objective to guide further actions in risk management. The other options relate to specific activities that may follow qualitative assessment or are part of a broader risk management strategy but are not the primary purpose of the qualitative assessment itself.