Risk Assessment Measure

A Risk Assessment Measure is a risk quantification measure that is an evaluation metric that quantifies risk levels.

• AKA: Risk Evaluation Metric, Risk Assessment Metric, Risk Quantification Tool, Risk Level Measure, Risk Rating System, Risk Scoring Method, Risk Measurement Instrument.
• Context:
  • It can typically quantify Risk Probability through standardized likelihood assessment scales.
  • It can typically evaluate Risk Impact through calibrated severity measurement frameworks.
  • It can typically calculate Risk Scores through validated risk assessment algorithms.
  • It can typically express Risk Tolerance Levels through defined threshold values.
  • It can typically represent Risk Exposure through normalized numerical risk indicators.
  • It can typically determine Risk Priority Rankings through comparative risk metrics.
  • It can typically assess Risk Velocity through time-to-impact measurements.
  • It can typically quantify Risk Interdependency through correlation coefficients.
  • ...
  • It can often combine Multiple Risk Factors into weighted composite risk scores.
  • It can often utilize Risk Matrixes for two-dimensional visual risk representation.
  • It can often incorporate Domain-Specific Risk Weights for contextual risk assessment calibration.
  • It can often enable Risk Comparisons across heterogeneous different risk scenarios.
  • It can often support Risk Aggregation through mathematical risk combination rules.
  • It can often facilitate Risk Trending Analysis through temporal risk measurement.
  • It can often provide Risk Confidence Intervals through statistical risk uncertainty quantification.
  • It can often generate Risk Distribution Curves through probabilistic risk modeling.
  • ...
  • It can range from being a Qualitative Risk Assessment Measure to being a Quantitative Risk Assessment Measure, depending on its risk measurement approach.
  • It can range from being a Simple Risk Assessment Measure to being a Complex Risk Assessment Measure, depending on its risk calculation complexity.
  • It can range from being a Single-Dimensional Risk Assessment Measure to being a Multi-Dimensional Risk Assessment Measure, depending on its risk factor scope.
  • It can range from being a Static Risk Assessment Measure to being a Dynamic Risk Assessment Measure, depending on its risk temporal characteristic.
  • It can range from being a Deterministic Risk Assessment Measure to being a Probabilistic Risk Assessment Measure, depending on its risk uncertainty handling.
  • It can range from being a Absolute Risk Assessment Measure to being a Relative Risk Assessment Measure, depending on its risk reference frame.
  • It can range from being a Discrete Risk Assessment Measure to being a Continuous Risk Assessment Measure, depending on its risk value resolution.
  • It can range from being a Individual Risk Assessment Measure to being a Portfolio Risk Assessment Measure, depending on its risk aggregation level.
  • ...
  • It can be produced by Risk Assessment Tasks through systematic risk evaluation procedures.
  • It can be standardized through Risk Assessment Frameworks for measurement consistency.
  • It can be validated through Historical Risk Data for predictive accuracy verification.
  • It can be communicated through Risk Dashboards for executive stakeholder understanding.
  • It can be updated through Continuous Risk Monitoring for real-time current risk status.
  • It can be benchmarked against Industry Risk Standards for comparative risk analysis.
  • It can be integrated into Risk Management Systems for automated risk decision support.
  • It can be audited through Risk Measurement Reviews for methodological soundness verification.
  • It can be calibrated using Risk Backtesting for measurement accuracy improvement.
  • It can be documented in Risk Registers for organizational risk memory.
  • ...
• Example(s):
  • Probability-Based Risk Assessment Measures, such as:
    • Risk Likelihood Scales, such as:
      • Five-Point Risk Probability Scale (Very Low: <10%, Low: 10-25%, Medium: 25-50%, High: 50-75%, Very High: >75%) for standardized qualitative risk assessment.
      • Percentage-Based Risk Probability (0-100% continuous scale) for precise quantitative risk assessment.
      • Frequency-Based Risk Probability (events per time period) for operational risk assessment.
      • Bayesian Risk Probability (prior and posterior distributions) for adaptive risk assessment.
    • Statistical Risk Measures, such as:
      • Value at Risk (VaR) calculating maximum loss at confidence level for portfolio financial risk assessment.
      • Conditional Value at Risk (CVaR) measuring expected loss beyond VaR for extreme tail risk assessment.
      • Expected Shortfall (ES) quantifying average of worst losses for coherent risk assessment.
      • Stress Testing Measures simulating extreme scenarios for systemic risk assessment.
  • Impact-Based Risk Assessment Measures, such as:
    • Risk Severity Scales, such as:
      • Five-Level Impact Scale (Negligible: <$10K, Minor: $10-100K, Moderate: $100K-1M, Major: $1-10M, Catastrophic: >$10M) for financial consequence assessment.
      • Monetary Loss Scale with logarithmic intervals for scalable financial impact assessment.
      • Operational Disruption Scale (hours/days of downtime) for business continuity assessment.
      • Reputational Impact Scale (local/regional/national/global) for brand damage assessment.
    • Multi-Criteria Impact Measures, such as:
      • Operational Impact Score combining downtime, productivity loss, and recovery cost for comprehensive business continuity assessment.
      • Reputational Damage Index integrating media coverage, stakeholder sentiment, and market value impact for holistic brand risk assessment.
      • Environmental Impact Rating combining ecological damage, regulatory penalties, and remediation costs for sustainability risk assessment.
      • Human Impact Measure quantifying injuries, fatalities, and quality-adjusted life years for safety risk assessment.
  • Composite Risk Assessment Measures, such as:
    • Risk Priority Number (RPN) multiplying occurrence probability × impact severity × detection difficulty for FMEA risk assessment.
    • Risk Heat Map Score positioning risks on likelihood-impact grid with color coding for visual risk assessment.
    • Weighted Risk Score applying stakeholder-defined weights to multiple risk dimensions for customized risk assessment.
    • Risk Adjusted Return Measures like Sharpe Ratio and Sortino Ratio for investment risk assessment.
  • Domain-Specific Risk Assessment Measures, such as:
    • Financial Risk Assessment Measures, such as:
      • Credit Risk Score (e.g., FICO scores 300-850) for consumer creditworthiness assessment.
      • Basel III Risk Measures including capital adequacy ratios for banking risk assessment.
      • Probability of Default (PD) models for corporate credit risk assessment.
      • Loss Given Default (LGD) estimates for recovery risk assessment.
    • Safety Risk Assessment Measures, such as:
      • Safety Risk Index combining incident frequency and severity for workplace occupational hazard assessment.
      • HAZOP Risk Ranking using consequence and likelihood matrices for process safety assessment.
      • Risk Assessment Code (RAC) matrix for military operational risk assessment.
      • Safety Integrity Level (SIL) ratings for functional safety assessment.
    • Cybersecurity Risk Assessment Measures, such as:
      • CVSS Score (0-10 scale) for vulnerability severity assessment.
      • Cybersecurity Risk Score combining threat, vulnerability, and asset value for comprehensive information security assessment.
      • FAIR Model Risk Quantification for cyber risk financial assessment.
      • Security Maturity Score measuring control effectiveness for organizational security assessment.
    • Environmental Risk Assessment Measures, such as:
      • Environmental Risk Rating combining pollution potential and ecosystem sensitivity for ecological impact assessment.
      • Carbon Risk Score quantifying climate transition exposure for sustainability risk assessment.
      • Water Risk Index measuring scarcity and quality risks for resource risk assessment.
      • Biodiversity Risk Metric assessing species and habitat threats for conservation risk assessment.
  • Contract-Related Risk Assessment Measures, such as:
    • Contract Performance Measures evaluating contractual obligation fulfillment risk.
    • Contract Complexity Score assessing legal interpretation risk.
    • Counterparty Risk Rating measuring contract default probability.
    • Contract Value at Risk quantifying maximum contractual loss exposure.
  • Existential Risk Assessment Measures, such as:
    • Existential Life-Risk Assessment Measures quantifying species survival probability.
    • P-Doom Measure assessing AI-induced existential risk probability.
    • Global Catastrophic Risk Index measuring civilization-ending event likelihood.
    • ASI Risk Measure evaluating artificial superintelligence emergence risk.
  • Specialized Risk Assessment Measures, such as:
    • Pandemic Risk Score combining transmission rate, severity, and healthcare capacity for public health risk assessment.
    • Supply Chain Risk Index integrating supplier reliability, geographic concentration, and redundancy for logistics risk assessment.
    • Political Risk Rating assessing regime stability, policy uncertainty, and expropriation risk for geopolitical risk assessment.
    • Model Risk Measure quantifying uncertainty in risk models themselves for meta-risk assessment.
  • ...
• Counter-Example(s):
  • Risk Assessment Tasks, which perform the assessment process rather than quantify risk results.
  • General Performance Measures, which evaluate actual performance rather than potential risk.
  • Risk Management Actions, which implement mitigation strategies rather than measure risk levels.
  • Descriptive Risk Statements, which provide qualitative descriptions without numerical quantification of risk.
  • Risk Category Labels, which classify risks into types without measuring specific risk levels.
  • Risk Indicators, which signal risk presence without quantifying risk magnitude.
  • Risk Controls, which reduce risk rather than measure it.
  • Risk Reports, which communicate risk information without being measures themselves.
• See: Risk Measure, Risk Assessment Task, Risk Quantification, Risk Matrix, Risk Score, Risk Assessment Framework, ISO 31000, COSO ERM, Basel Accords, NIST Risk Management Framework.

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References

2020

• (ISO, 2020) ⇒ International Organization for Standardization (2020). "ISO 31000:2018 Risk Management — Guidelines". In: ISO.
  • QUOTE: Risk assessment involves identifying, analyzing, and evaluating risks, and typically requires risk assessment measures to quantify impact and likelihood.

    ISO 31000 provides a standardized framework to support consistent and transparent risk evaluation.

2015

• (Fenz et al., 2015) ⇒ Stefan Fenz, Andreas Ekelhart, and Thomas Neubauer (2015). "Formalizing Information Security Knowledge". In: International Journal of Information Security.
  • QUOTE: Risk assessment measures such as CVSS offer repeatable, objective evaluation metrics to compare threat scenarios.

    They are crucial for prioritizing security incidents and aligning resources with risk levels.

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