1. What Is Risk Impact?

Risk Impact is a qualitative or quantitative risk score calculated by multiplying the probability of a risk event occurring by the severity of its consequences. It helps organizations prioritize risks and allocate resources effectively for risk mitigation.

2. How Does The Calculator Work?

The calculator uses the Risk Impact formula:

Where:

• \( Probability \) — Likelihood of risk occurrence (0-100%)
• \( Severity \) — Magnitude of impact if risk occurs (0-10 scale)
• \( Risk\ Impact \) — Resulting risk score (unitless)

Explanation: The formula combines the chance of a risk happening with how severe its effects would be, providing a comprehensive risk assessment metric.

3. Importance Of Risk Impact Calculation

Details: Calculating Risk Impact is essential for effective risk management, enabling organizations to identify high-priority risks, make informed decisions, and develop appropriate risk response strategies.

4. Using The Calculator

Tips: Enter probability as a percentage (0-100%) and severity on a scale of 0-10. Higher values indicate greater likelihood and more severe consequences respectively.

5. Frequently Asked Questions (FAQ)

Q1: What Is A Good Risk Impact Score?
A: Lower scores are better. Typically, scores below 0.3 indicate low risk, 0.3-0.7 moderate risk, and above 0.7 high risk, though thresholds vary by organization.

Q2: How Should Probability And Severity Be Determined?
A: Use historical data, expert judgment, statistical analysis, or risk assessment frameworks. Consistency in rating scales across the organization is crucial.

Q3: Can Risk Impact Be Used For All Types Of Risks?
A: Yes, it's applicable to financial, operational, strategic, compliance, and other risk types, though the specific probability and severity criteria may differ.

Q4: How Often Should Risk Impact Be Recalculated?
A: Regularly, especially when there are changes in the business environment, new information becomes available, or after implementing risk mitigation measures.

Q5: What Are The Limitations Of This Calculation?
A: It relies on subjective assessments, may not capture complex risk interdependencies, and doesn't account for risk velocity or emerging risks without manual adjustment.