What is the definition of 'risk' in the context of risk management?

In the context of risk management, the definition of 'risk' is best represented as a calculation of probability multiplied by impact. This means that risk involves assessing both the likelihood of an adverse event occurring and the potential consequences or severity of that event if it does happen.

By evaluating both factors, organizations can prioritize risks and allocate resources effectively to mitigate those that pose the greatest threat to their objectives. This combination of probability and impact provides a quantifiable way to understand and communicate the nature of risks, aiding decision-makers in developing strategies to manage them appropriately.