Risk criteria is a term that most people don’t understand, and it’s important to know the basics. Risk can be defined as an uncertain event or circumstance that, if it occurs, has an effect on at least one objective of the organization. It is used in order to help determine how likely something will happen and what the potential consequences may be. Risk Criteria include:
1) Probability – The likelihood that a given event will occur;
2) Severity – The magnitude of harm resulting from the occurrence of the event;
3) Consequence – The loss incurred when an asset is damaged or destroyed (typically quantified in monetary terms).
In conclusion, Risk Criteria are a very important part of Risk Management. In order to determine what the best course of action is, it’s key to understand all aspects surrounding Risk that will help you do so.