Page 38 - EBOOK RISK MANAGEMENT

different risks and develop an appropriate mitigation strategy. Below is an example

of risk matrix which assist risk manager in evaluating loss.

Table 4.1Risk Matrix

Almost Certain
Expected to Moderate High Critical Critical Critical
occur regularly Risk Risk Risk Risk Risk
under normal
circumstances
Likely
Expected to Moderate High High Critical Critical
Frequency / Probability Possible Low Moderate High High Critical
Risk
occur at some
Risk
Risk
Risk
Risk
time
May occur at
Risk
Risk
Risk
Risk
Risk
some time
Unikely
Unlikely to
occur in
Risk
Risk
Risk
Risk
Risk
normal Low Low Moderate Moderate High
circumstances
Rare
Could Low Low Low Low Moderate
happen, but Risk Risk Risk Risk Risk
probably
never will
Not Significant Minor Moderate Major Severe
Minor injuries Injuries or Injuries or Injuries or Fatality
or discomfort. illness illness illness
No medical requiring requiring requiring in
treatment or medical hospital permanent
measurable treatment. admission. impairment.
physical Temporary
effects. impairment.

Severity / Impact

4.3 The Measurement of Probability

Probability refers to the chances of an uncertain event happening, in view that
there are more than one possible outcome. Probability means that something will

happen in the future, which can be expressed on a linear scale from 0 to 1.

Probability 0 indicates that an event will not occur while probability 1 indicates
that an event is certain to occur. Whenever the outcome of an event is still unsure,

29