Question

What is risk? How can a risk of a security be calculated? Explain your answer with an example.

Answer 1

Answer:

In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value, often focusing on negative, undesirable consequences. Many different definitions have been proposed.

The risk equation I use is quite simple: risk equals impact multiplied by probability weighed against the cost: Risk=Impact X Probability / Cost. Impact is the effect on the organization should a risk event occur. Probability is the likelihood the event could occur within a given timeframe.