1. What Is Risk Exposure?

Risk exposure is a quantitative measure that combines the probability of a risk event occurring with the potential impact of that event. It helps organizations prioritize risks and allocate resources effectively for risk mitigation.

2. How Does The Calculator Work?

The calculator uses the risk exposure formula:

Where:

• \( Probability \) — Likelihood of risk occurring (0-100%)
• \( Impact \) — Severity of consequences if risk occurs (1-10 scale)
• \( Exposure \) — Risk exposure score (0-10 scale)

Explanation: The formula multiplies probability (converted to decimal) by impact to generate a risk exposure score that helps prioritize which risks require immediate attention.

3. Importance Of Risk Exposure Calculation

Details: Calculating risk exposure is essential for effective risk management, allowing organizations to focus on high-probability, high-impact risks while optimizing resource allocation for risk mitigation strategies.

4. Using The Calculator

Tips: Enter probability as a percentage (0-100%) and impact on a scale of 1-10, where 1 represents minimal impact and 10 represents catastrophic impact. All values must be within valid ranges.

5. Frequently Asked Questions (FAQ)

Q1: What Is A Good Risk Exposure Score?
A: Lower scores are better. Scores below 2.5 indicate low risk, 2.5-5.0 moderate risk, 5.0-7.5 high risk, and above 7.5 critical risk requiring immediate action.

Q2: How Should Probability Be Estimated?
A: Use historical data, expert judgment, statistical analysis, or industry benchmarks. Document the basis for your probability estimates.

Q3: What Factors Determine Impact Scale?
A: Consider financial loss, reputational damage, operational disruption, safety concerns, regulatory penalties, and strategic consequences.

Q4: How Often Should Risk Exposure Be Recalculated?
A: Regularly - at least quarterly, or whenever significant changes occur in the business environment, operations, or risk landscape.

Q5: Can This Method Be Used For All Types Of Risks?
A: While applicable to most operational and financial risks, qualitative assessment may be needed for strategic risks or those with uncertain probabilities.