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Risk Impact Score Formula:
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The Risk Impact Score is a quantitative measure used in risk assessment to evaluate the potential severity of identified risks. It combines the probability of occurrence with the potential impact magnitude to provide a comprehensive risk rating.
The calculator uses the Risk Impact Score formula:
Where:
Explanation: This multiplicative approach ensures that both the likelihood and severity of risks are properly weighted in the final assessment.
Details: Risk Impact Scores help organizations prioritize risks, allocate resources effectively, and make informed decisions about risk mitigation strategies. Higher scores indicate risks that require immediate attention.
Tips: Enter probability as a decimal between 0 and 1 (e.g., 0.25 for 25% chance). Impact score should be an integer between 1 (minimal impact) and 5 (critical impact).
Q1: What do the probability values represent?
A: Probability values range from 0 (impossible) to 1 (certain). For example, 0.1 = 10% chance, 0.5 = 50% chance, 0.9 = 90% chance.
Q2: How is the impact score determined?
A: Impact scores typically follow this scale: 1=Negligible, 2=Minor, 3=Moderate, 4=Major, 5=Critical. Organizations may customize these definitions.
Q3: What is considered a high risk score?
A: Scores above 3.0 generally indicate high risks requiring immediate action. Scores below 1.0 are typically low priority.
Q4: Can this formula be used for all types of risks?
A: While applicable to most risk types, some specialized risks may require additional factors or different weighting approaches.
Q5: How often should risk scores be recalculated?
A: Risk scores should be reviewed regularly (quarterly or when significant changes occur) as probabilities and impacts can change over time.