Terminology Index
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Impact Estimation
Judging how much harm a risk would cause if it materialized, financial loss, operational disruption, reputational or legal damage, so risks can be prioritized by consequence alongside their likelihood.
Impact estimation is the part of risk assessment that gauges consequences: what the organization would lose if a risk event occurred, across financial, operational, reputational, and legal dimensions. Paired with likelihood, it determines a risk's overall level and priority. Estimates can be qualitative (low/medium/high) or quantitative (dollar ranges, as in FAIR), and doing them consistently is what lets an organization compare risks and focus on those with the greatest potential harm.
Introduced in: Risk Management Fundamentals
Examples
- Estimating the financial and operational loss if a key system went down.
- Rating a risk's impact as high due to potential regulatory penalties.
- Pairing impact with likelihood to set a risk's overall priority.
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