1. What Is Risk Statistics?

Risk statistics involves quantifying potential losses or negative outcomes by combining the probability of an event occurring with the magnitude of its impact. This fundamental risk calculation helps in decision-making across various fields including finance, project management, and safety assessment.

2. How Does The Risk Calculator Work?

The calculator uses the basic risk formula:

Where:

• \( Probability \) — Likelihood of event occurring (0-100%)
• \( Impact \) — Severity of consequences (scale 1-10)
• \( Risk \) — Calculated risk score (0-10 scale)

Explanation: The formula multiplies probability percentage (converted to decimal) by impact magnitude to generate a standardized risk score.

3. Importance Of Risk Assessment

Details: Quantitative risk assessment enables prioritization of risks, resource allocation, and informed decision-making. It provides objective data for comparing different risk scenarios and developing mitigation strategies.

4. Using The Calculator

Tips: Enter probability as percentage (0-100) and impact on a scale of 1-10 where 1 represents minimal impact and 10 represents catastrophic impact. Ensure both values are within valid ranges for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What Do Different Risk Scores Mean?
A: Scores 0-3 indicate low risk, 3-6 moderate risk, 6-8 high risk, and 8-10 critical risk requiring immediate attention.

Q2: How Should Impact Be Scaled?
A: Impact should reflect financial loss, safety consequences, project delays, or reputational damage on a consistent 1-10 scale across your organization.

Q3: Can This Formula Handle Multiple Risks?
A: This calculates individual risks. For portfolio risk, consider correlation and use more advanced statistical methods.

Q4: What Are The Limitations Of This Approach?
A: This basic formula doesn't account for risk correlations, time factors, or non-linear relationships between probability and impact.

Q5: When Should More Complex Risk Models Be Used?
A: For financial investments, engineering projects, or safety-critical systems, consider Monte Carlo simulations or fault tree analysis.