As risk professionals, we’re constantly making assessments and decisions. About what risk is worth it, what risk needs to be avoided, or what risk needs to be monitored. These decisions are often critical to business success.
Traditionally, we’ve been using fairly ambiguous terms to identify where a certain risk falls—using color coding and low, medium, or high labels.
But low, medium, and high can be so subjective.
What happens when you have two different risks that are labeled medium? Should they receive equal attention, manpower, or monetary spend? Do they equal one risk labeled high? Does it matter who’s doing the assessment? Are these labels hard and fast or can they be manipulated?
You can call this approach ambiguous, subjective, qualitative, or even down-right confusing. And that’s just to the people who understand the labels. When you throw leadership, the c-suite, or the board into the mix, there’s a major communication barrier. No matter what, it’s incredibly difficult to be consistent or confident that your
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