Page 46 - RISK Management IC86 Ebook
P. 46
Risk Management
l Risks are divided into 5 bands namely - Catastrophic, Major,
Medium, Moderate & Minor
Risk Mapping
l Yet another style is Risk Mapping where Frequency/Likelihood
of risk occurring is plotted against Severity/Impact of risks.
Such a risk map enables separating losses into four categories
as
n HH - High Frequency High Severity
n LH - Low Frequency High Severity
n HL - High Frequency Low Severity
n LL - Low Frequency Low Severity
l Obviously the priority for addressing will be the HH i.e. High
Frequency High Severity losses.
l Once risk has been identified and prioritized according to
probability and loss, those issues that are at the top of the
prioritized list (those of highest risk) can be addressed. One
would logically want to completely eliminate anything that is
of high risk. Although ideal, this is not usually possible as
eliminating all risk would also eliminate most of the business
opportunities.
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