Understanding risk consequence
Andrew Lingley avatar
Written by Andrew Lingley
Updated over a week ago

Risk consequence refers to the potential impact or outcome of a risk event occurring. It is a crucial aspect of risk assessment and management, helping your organisation understand the severity of possible consequences associated with specific risks.

When evaluating risk consequence, several factors are typically considered:

  • Financial impact: This includes direct costs such as financial losses, expenses for recovery or repairs, and potential liabilities.

  • Operational impact: Risks can affect operational processes, productivity, and efficiency, leading to disruptions, downtime, or delays.

  • Reputational impact: Negative events can harm your organisation's reputation, leading to loss of trust, customer dissatisfaction, or stakeholder backlash.

  • Regulatory and legal consequences: Risks may result in non-compliance with regulations, legal penalties, fines, or lawsuits.

  • Health and safety implications: Risks can pose threats to the health and safety of employees, customers, or the public, leading to injuries, accidents, or environmental damage.

Similarly to risk likelihood, risk consequence is often assessed using qualitative terms such as "low," "medium," or "high," or quantitatively with numerical scales or monetary values.

Understanding risk consequence will help your organisation prioritise risks, develop appropriate risk response strategies, allocate resources effectively, and ensure business continuity by mitigating potential negative impacts.

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