Risk

Risk = f(consequence, likelihood)

A simplified version of this relationship, which is often appropriate, expresses risk as the product of the likelihood and the consequences.

(i,e., Risk =Consequence x Likelihood).

Thus, if consequences are expressed in terms of loss per incident, and likelihood as the number of incidents per year, the calculated risk will have the units of losses per year.

This equation shows that a numerically equal value of risk can result from an unlimited number of frequency and consequence pairs (see below).

A single loss every 10 years and 100 losses every 1,000 years yield the same value of risk.