you might measure consequences in terms of human health, rather than dollar value). Also use descriptors that suit your purpose (e.g. The scales above use 4 different levels however, you can use as many levels as you need. Note: Ratings vary for different types of businesses. Insignificant impact on your business with minimal financial loss Moderate impact on your business with some financial loss Major impact on your business with large financial loss Impact likely to cause business to stop trading or significant financial losses felt Happens every 10 years or more in this industry Happens about once a year in this industry Happens more than once a year in this industry Keep in mind that control measures decrease the level of risk, but do not always eliminate it.Ī risk analysis can be documented in a matrix, such as this: Likelihood scale example Level It should be analysed in relation to what you are currently doing to control it. Level of risk is often described as low, medium, high or very high. This is referred to as the level of risk, and can be calculated using this formula: To analyse risks, you need to work out the likelihood of it happening (frequency or probability) and the consequences it would have (the impact) of the risks you have identified. You need to separate minor risks that may be acceptable from major risks that must be managed immediately. Once you have identified the risks to your business, you need to assess the possible impact of those risks.
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