IJCA - Volume 2 - Flipbook - Page 38
38 The International Journal of Conformity Assessment
table:
the four example risks. See below for a reorganized
ranked list based on IV:
Risks
100
TABLE 4.
90
80
AD
B C
70
Ranked Order
Risk Identifier
IV
1
C
483
2
D
473.6
3
A
465
4
B
453.6
Likelihood
60
50
40
30
20
Step 5: Identify Acceptable Risk Level (ARL) and
Risks Exceeding ARL
10
0
0
1
2
3
4
5
6
7
8
9
10
Impact
Figure 3
The above risks have Impact and
Likelihood values
c
so close together, it is difficult to see which risk is
more critical. For this situation, calculate the Impact
Value (IV) of each risk. To arrive at the IV, multiply the
Impact, by the Likelihood; see the far-right column
for calculated IVs.
TABLE 3.
Impact
(1-10)
Likelihood
(1% to
100%)
Loss of internet connectivity while
traveling
6.2
75
National
lockdown in
response to
pandemic
6.3
Complicated
paperwork
requires too
much time
while on
the jobsite,
which prevents project
completion
6.9
Admin- Contract emistrative ployees do
not submit
pay cards on
time
6.4
Risk
Identifier
Category
A
Travel
B
C
D
Service
Completion
Risk
72
70
74
Impact
Value
(Impact x
Likelihood
= IV)
465
453.6
483
473.6
After calculating IV for each of the risks, reorganize
them so that they appear in ranked order.
Considering the above results, risk C has the highest
value, which indicates that it is the most critical of
Upon arriving at a hierarchical list of risks and after
plotting risks on a graph to see where they fall within
the four risk zones, organizations should identify
an Acceptable Risk Level (ARL). This level can be
identified generally based on the four risk zones;
for example, all risks falling within the medium and
low risk zones are acceptable, or, it can be identified
more granularly based on a specific IV; for example,
all risks with an IV less than 400 are acceptable.
Once the ARL has been identified, note the risks that
fall above the ARL. These are the risks that require
treatment. See below for an example:
ARL = Risks < IV=400
TABLE 5.
Ranked
Order
Risk Identifier
IV
Treatment Required?
1
C
483
Yes
2
D
473.6
Yes
3
A
465
Yes
4
B
453.6
Yes
5
E
419
Yes
6
H
400.2
Yes
7
F
398
No
8
G
350.4
No
9
I
343
No
10
J
320.5
No
Step 6: Circulate Risks Exceeding ARL Back
to Interested Parties and Ask for Mitigation/
Contingency Plans
Take the list of risks requiring treatment and
recirculate to the interested parties and ask for
suggested mitigation and contingency plans for
each risk. While like before, this should not be a
time-consuming and highly technical process, it
