The termimpactrefers to the severity or magnitude of the consequences of an event if it occurs. It is a key metric in risk analysis, used alongside likelihood to determine overall risk.
Key Points About Impact:
Definition: Impact measures the potential effect of an event on organizational objectives, such as financial losses, reputational harm, or operational disruptions.
Role in Risk Assessment:
Impact is evaluated to understand the significance of a risk.
Frameworks likeCOSO ERMrecommend assessing impact in terms of quantitative and qualitative outcomes.
Examples:
Financial loss due to a data breach.
Customer dissatisfaction caused by product delays.
Why Option A is Correct:
Impact specifically estimates the consequences of an event, making it the correct answer.
Why the Other Options Are Incorrect:
B. Consequence: While consequence describes the outcome, impact specifically quantifies or qualifies its severity.
C. Likelihood: Likelihood measures probability, not consequences.
D. Cause: Cause identifies why an event happens, not its effects.
References and Resources:
COSO ERM Framework– Emphasizes impact analysis in enterprise risk management.
ISO 31000:2018– Provides guidelines for impact assessment.
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