1. What is Risk Value?

Risk Value is a quantitative measure of risk calculated by multiplying the probability of an event occurring (likelihood) by the severity of its impact. It helps prioritize risks and make informed decisions about risk mitigation.

2. How Does the Calculator Work?

The calculator uses the basic risk formula:

Where:

• \( \text{Likelihood} \) — Probability of occurrence (0-1 scale)
• \( \text{Impact} \) — Severity of consequences (1-10 scale)

Risk Levels:

• 0-2: Low risk
• 2.1-5: Medium risk
• 5.1-8: High risk
• 8.1-10: Critical risk

3. Importance of Risk Assessment

Details: Calculating risk value helps organizations prioritize risks, allocate resources effectively, and implement appropriate mitigation strategies based on the level of risk.

4. Using the Calculator

Tips:

• Enter likelihood as a decimal between 0 (never) and 1 (certain)
• Enter impact as a number between 1 (minimal) and 10 (catastrophic)
• The calculator will compute and classify the risk level

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between likelihood and probability?
A: In risk management, likelihood refers to how probable an event is to occur, while probability is the mathematical measure of that chance (0-1 scale).

Q2: How should I determine the impact score?
A: Impact should consider factors like financial loss, safety concerns, reputational damage, and operational disruption on a consistent scale.

Q3: What are the limitations of this simple risk calculation?
A: This basic formula doesn't account for multiple risk factors, correlations between risks, or complex scenarios that might require more sophisticated analysis.

Q4: How often should risks be reassessed?
A: Risk assessments should be reviewed regularly (e.g., quarterly) or whenever significant changes occur in the environment or operations.

Q5: Can this be used for all types of risk?
A: While the basic formula applies to many risk types, specialized risks (financial, cybersecurity) may require additional factors in their calculations.