In risk assessment, what does "impact" refer to?

In the context of risk assessment, "impact" specifically refers to the consequences or damage that could result if a risk is realized. This means that when an organization assesses risks, they need to understand not only how likely a risk is to occur but also what the repercussions would be if it did occur. The impact can be measured in various terms, such as financial cost, operational disruption, reputational damage, or harm to individuals or assets.

Assessing impact helps organizations prioritize risks based on their severity, allowing for more effective decision-making in developing mitigation strategies. Those with a higher impact tend to receive more attention in risk management processes, ensuring that appropriate resources are allocated to manage and minimize these risks effectively.