Definition
The systematic process of evaluating the potential risks that may be involved in a projected activity or undertaking. It combines the probability of an event with its potential impact: .
- How to read: “The risk equals probability times impact.”
- Meaning: Expected harm scales with both how likely an event is and how bad it would be. High probability + low impact can equal low probability + high impact.
Why It Matters
‘Hope is not a strategy.’ If you don’t systematically evaluate the ‘Probability x Impact’ of your failures, you are gambling with your survival. Risk assessment is the ‘Map of Mines’ that allows you to navigate dangerous territories without hitting a catastrophic end-state.
Core Concepts
- Hazard Identification: Recognizing potential sources of harm.
- Vulnerability Analysis: Assessing susceptibility to the identified hazards.
- Impact Evaluation: Quantifying the potential consequences.
- Mitigation Strategies: Developing plans to reduce probability or impact.