Your risk increases if the probability of the event goes up or if the consequence of the event goes up.įigure 1. One way to look at risk is by using a risk matrix, as shown below in Figure 1. So if there is a high chance of an event occurring, or the consequence is severe, then the risk to you would be high. ![]() Using the previous example, the overall risk profile is determined by multiplying the probability of a given event by the resulting consequence if that event occurs. ![]() Yes, we threw some math at you, but this concept is relatively easy to grasp. Let’s define risk for now as the potential of gaining or losing something of value. As this example conveys, the idea of risk is relatively simple in itself but can become complex quickly. If you’re overdue, what are the potential consequences of not having your tires changed? Are you risking personal injury to yourself, your family, or others by not changing them? The risk profile changes based on myriad variables that exist. If your tires were changed recently and are in good shape, then it’s most likely business as usual. Question two requires more thought, however, because it narrows the task down to a specific time frame. Yes, the tires should be changed somewhat routinely over the lifetime that you own or lease the car.
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