3.1 Measuring the risk

Figure 11  Measuring the risk

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The graphic presents a person standing by a set of bricks which vertically spell out the word ‘Risk’. The person is measuring the height of the bricks.

Figure 11  Measuring the risk

To carry out a simple business risk assessment we will use these options:

Potential for harm

• Serious – could shut the business down or prevent it starting up.
• Problematic – could restrict activities or profit to a significant degree.
• Inconvenient – only a minor impact, more of an inconvenience.

Likelihood

• Very likely – almost certain to happen.
• Likely – fairly likely to happen, the business would be considered fairly lucky if this did not happen.
• Unlikely – not really expected to happen, the business would be considered unlucky if this happened.

Conventionally this presented as a 3×3 matrix that allows for the highest risks to be identified (Figure 12).

Figure 12  Risk assessment table

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The graphic is a cross tabulation which compares the likelihood with potential for harm. At high risk are combinations which are very likely-serious, very likely-problematic and likely-serious. At medium risk are combinations which are very likely-inconvenient, likely-problematic, and unlikely-serious. At low risk are combinations which are likely-inconvenient, unlikely-problematic and unlikely-inconvenient.

Figure 12  Risk assessment table

The business owner should identify the various hazards and then decide on the relative potential for harm and likelihood for each. The matrix can be used to identify the risk. All hazards that come out as ‘high risk’ or ‘medium risk’ should have something put in place for when/if they happen.

We are keeping our definitions simple using just high risk, medium risk and low risk, in some instances these categories are broken down much further.