Question

What is the basic formula for risk analysis? Apply it to a specific risk. You may make up the numbers involved.

Answer 1

Risk analysis is the way toward surveying the probability of an antagonistic event happening inside the corporate, government, or ecological area. Risk analysis is the investigation of the fundamental vulnerability of a given course of action and alludes to the vulnerability of anticipated income streams, the probability of a project's success or failure, the likelihood of an undertaking's prosperity or disappointment, and conceivable future financial states. Risk analysts frequently work in tandem with forecasting professionals to limit future negative unexpected impacts.

Basic formula for risk analysis is risk = probability x loss.

The formulation risk = probability (of an interruption event) x loss (associated with the event occurrence) is a proportion of the expected loss associated with something (eg, process, a creation movement, an investment etc) subject to the event of the thought about disturbance event. It is an approach to measure risks.

You may likewise reword as risk = failure probability x harm related to the failure.

For instance, accept you need to pick between 2 distinct ventures A and B: A is dependent upon a disturbing event with probability 0.05 with a connected loss of 1000, while B is dependent upon an upsetting function with probability 0.06 with lost 800. Figuring the danger with the equation, you have:

Risk(A) = 0.05 x 1000 = 50

Risk(B) = 0.06 x 800 = 48

Along these lines, on the off chance that you are risk averse, you may prefer B over A.