Risk Impact Definition

Risk impact is the potential for an event to cause harm or other adverse effects. It includes the probability of an event occurring and the severity of its consequences. Probability is the likelihood that an event will occur, while severity is the degree of harm that would result from the event if it did occur.

Risk impact can be expressed in terms of a single number, called the expected value. This is simply the product of the probability and severity of an event. For example, if there is a 1% chance that a particular earthquake will cause $1 billion in damage, then the expected value of that earthquake is $10 million.