1. What is the Risk Formula?

The Risk Formula calculates potential loss by multiplying the probability of an event occurring by the consequence if that event occurs. It provides a quantitative measure of risk exposure.

2. How Does the Calculator Work?

The calculator uses the Risk formula:

Where:

• \( Probability \) — Likelihood of event occurring (0 to 1)
• \( Consequence \) — Magnitude of impact if event occurs

Explanation: The formula provides a simple yet powerful way to quantify risk by considering both how likely an event is and how severe its impact would be.

3. Importance of Risk Calculation

Details: Risk calculation is fundamental in decision making, project management, safety assessments, and financial planning. It helps prioritize risks and allocate resources effectively.

4. Using the Calculator

Tips: Enter probability as a decimal between 0 and 1, and consequence as a positive number representing impact magnitude. Both values must be valid.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between probability and consequence?
A: Probability measures how likely an event is (0 = impossible, 1 = certain), while consequence measures the severity of impact if it occurs.

Q2: How should I interpret the risk value?
A: Higher values indicate greater risk. The exact interpretation depends on your context and risk tolerance thresholds.

Q3: Can I use percentages for probability?
A: Yes, but convert percentages to decimals (e.g., 25% = 0.25) before entering.

Q4: What units should consequence be in?
A: Use consistent units that make sense for your specific risk assessment (dollars, hours, lives, etc.).

Q5: Are there more complex risk formulas?
A: Yes, some models incorporate multiple probabilities and consequences, or use different mathematical approaches for specific applications.