When evaluating the impact of each risk, it is crucial to break down the potential consequences into various categories to get a comprehensive understanding. Here’s a structured approach to assessing the impact of each risk:
1. Financial Impact
2. Operational Impact
3. Reputational Impact
4. Legal and Compliance Impact
5. Safety and Health Impact
6. Strategic Impact
7. Stakeholder Impact
8. Reputation and trust
9. Recovery and Response
Example Analysis:
Financial Risk Example:
Risk: Cybersecurity breach
Impact:
Direct Costs: $500,000 for legal fees and fines.
Indirect Costs: $1 million in lost revenue due to damaged customer trust.
Operational Impact: Increased workload for IT staff to manage the breach.
Reputational Impact: Negative media coverage leading to a loss of 20% of customers.
Operational Risk Example:
Risk: Key supplier failure
Impact:
Disruption: Production halted for two weeks.
Efficiency: Increased costs due to expedited shipping from alternate suppliers.
Customer Impact: Delay in order fulfillment, leading to customer dissatisfaction.