Page 202 - Demo

By way of example:
If you run a care home, the impact of a re in the care home would be catastrophic, so you could give a score of 5. However, the likelihood (assuming your home is run to modern standards) of a re is remote, so you could give a score of 1. This would provide an overall score of:
Score = (Impact x Likelihood) + (Impact) 10 = (5 x 1) + (5) producing an amber risk.
Alternatively, you might decide that there was a risk that members of staff would potentially commit low level fraud in relation to their overtime. The effect of this would probably be minor in isolated instances, so a score of 2. However, the likelihood might be considered to be highly probable, so a score of 5. This would provide an overall score of:
Score = (Impact x Likelihood)
12 = (2 x 5)
producing an amber risk.
So, potentially both risks should be treated in the same way.
HOW SHOULD WE DEAL WITH THE RISKS WE HAVE IDENTIFIED?
+ (Impact) + (2)
As charity trustees, you need to decide upon the appropriate parameters for risk, as far as your charity is concerned. What is your appetite for risk? Not all risks are negative, sometimes you need to accept the fact that there are risks associated with a particular course of action, but proceed in any event, as the potential outcome will be worth it. Taking the simple example of crossing the road, if you were ultra-cautious, you would only ever cross a road using a bridge or a subway, but this would make life very dif cult. Alternatively, if you had a high tolerance to risk, you would just run across a road whenever you needed to get to the other side, but this is highly risky.
198 Chapter 10