The Psychology of Quality and More

Risk Exposure

A problem when you have a number of possible risks is that it can be difficult to decide which risks are worth putting effort into addressing. Risk Exposure is a simple calculation that gives a numeric value to a risk, enabling different risks to be compared.

Risk Exposure of any given risk = Probability of risk occurring x total loss if risk occurs

A limitation of this calculation is that it will give the same scores to high-probability/low loss risks and low-probability/high loss risks. If you are concerned with these differences, a Risk Matrix may be a better way of evaluating risks. 

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