1. What Is Risk Impact?

Risk Impact quantifies the potential effect of a risk event by combining its probability of occurrence with the severity of its consequences. It provides a numerical score to prioritize risks and allocate resources effectively.

2. How Does The Calculator Work?

The calculator uses the Risk Impact formula:

Where:

• \( Probability \) — Likelihood of risk occurrence (0-1 scale)
• \( Severity \) — Magnitude of impact if risk occurs (0-10 scale)
• \( Impact\ Score \) — Resulting risk score (unitless)

Explanation: The formula multiplies probability (0-1 scale) by severity (0-10 scale) to generate a risk impact score that helps in risk prioritization and decision-making.

3. Importance Of Risk Impact Calculation

Details: Calculating risk impact is essential for effective risk management, allowing organizations to identify high-priority risks, allocate resources efficiently, and develop appropriate mitigation strategies.

4. Using The Calculator

Tips: Enter probability as a decimal between 0 and 1 (e.g., 0.25 for 25% chance), and severity as a number between 0 and 10 representing the impact magnitude. Both values must be within their respective ranges.

5. Frequently Asked Questions (FAQ)

Q1: What Is A Good Risk Impact Score?
A: Lower scores indicate lower risk impact. Typically, scores below 2 are considered low, 2-5 moderate, and above 5 high impact requiring immediate attention.

Q2: How Should Probability Be Estimated?
A: Probability can be estimated using historical data, expert judgment, statistical analysis, or a combination of these methods based on available information.

Q3: What Factors Influence Severity Rating?
A: Severity considers financial impact, safety consequences, operational disruption, reputational damage, and regulatory compliance issues.

Q4: Can This Be Used For All Types Of Risks?
A: This method works well for quantifiable risks but may need adaptation for qualitative risks or those with complex interdependencies.

Q5: How Often Should Risk Impact Be Recalculated?
A: Regular reassessment is recommended, especially when conditions change, new information becomes available, or after implementing risk treatments.