quantitative risk assessment (QRA)

 A quantitative risk assessment (QRA) is a formal method for estimating the likelihood and consequences of hazardous events: 

Purpose

QRAs help organizations make informed decisions about risk management, safety regulations, and operational safety. They can also help identify areas for improvement and balance safety and profitability. 

How it works

QRAs use measurable, objective data to determine the probability of loss, an asset's value, and other associated risks. They evaluate the likelihood and severity of potential loss of containment scenarios. 

When it's used

QRAs are often required for production and processing facilities, high-pressure pipelines, and storage and importation sites. They can also be used in business situations that require schedule and budget control planning, or when making go/no go decisions on large, complex projects. 

Industry-standard formula

The industry-standard formula for quantitative risk analysis is Annualized Loss Expectancy (ALE) = Single Loss Exposure (SLE) × Annualized Rate of Occurrence (ARO).