Skip main navigation

Quantitative measurements of risk

Quantitative measures of risk combine two components: the probability of the risk and the size of the impact.

If you accept the argument that risk matters and that it affects how managers and investors make decisions, it follows logically that measuring risk is a critical first step toward managing it.

Quantitative measures of risk must combine the two quantitative components of risk: the probability of the risk occurring and the size of the impact of the risk occurring.

Measure of impact

The selected measure or measures of impact is critical for the risk manager to make risk management strategies. It could be a case of illness, which could be further stratified into various levels of illness and be translated into an economic impact or some social impact measure, such as quality-adjusted life years (QALY).

Measure of risk

The risk measure, the probability and impact components, together with attendant uncertainties are involved in the description of the risk.

Watch the video and then summarise what you have learned.

This article is from the free online

Enterprise Risk Management

Created by
FutureLearn - Learning For Life

Reach your personal and professional goals

Unlock access to hundreds of expert online courses and degrees from top universities and educators to gain accredited qualifications and professional CV-building certificates.

Join over 18 million learners to launch, switch or build upon your career, all at your own pace, across a wide range of topic areas.

Start Learning now