1. What Is Risk Probability And Impact?

Risk assessment involves evaluating potential risks by analyzing their probability of occurrence and the impact they would have if they occurred. This quantitative approach helps prioritize risks and allocate resources effectively.

2. How Does The Calculator Work?

The calculator uses the risk score formula:

Where:

• \( Probability \) — Likelihood of risk occurrence (0 to 1 scale)
• \( Impact \) — Severity of consequences if risk occurs (1 to 5 scale)
• \( Risk\ Score \) — Quantified risk level (0 to 5 scale)

Explanation: The formula multiplies probability (0-100% represented as 0-1) by impact severity (1-5 scale) to generate a risk score that helps prioritize which risks require immediate attention.

3. Importance Of Risk Assessment

Details: Proper risk assessment enables organizations to identify potential threats, prioritize mitigation efforts, allocate resources efficiently, and make informed decisions about risk acceptance or avoidance.

4. Using The Calculator

Tips: Enter probability as a decimal between 0 and 1 (e.g., 0.25 for 25% probability). Enter impact as an integer between 1 (minimal impact) and 5 (critical impact). All values must be within valid ranges.

5. Frequently Asked Questions (FAQ)

Q1: What Do The Probability Values Represent?
A: Probability values range from 0 (impossible) to 1 (certain), representing the likelihood of a risk event occurring within a specific timeframe.

Q2: How Is Impact Scale Defined?
A: Impact is typically rated on a 1-5 scale: 1=Negligible, 2=Minor, 3=Moderate, 4=Major, 5=Critical, based on consequences to objectives.

Q3: What Are Typical Risk Score Ranges?
A: Scores 0-1=Low risk, 1-2=Medium risk, 2-3=High risk, 3-5=Critical risk. Higher scores indicate greater priority for mitigation.

Q4: When Should Risk Assessment Be Performed?
A: During project planning, when changes occur, periodically throughout project lifecycle, and when new risks are identified.

Q5: Are There Limitations To This Method?
A: This approach simplifies complex risk relationships and may not capture interdependencies between risks or qualitative factors.