Risk Reference Guide

2016

Impact parameters (1)

Factor
Insignificant
Example Risk measurement
Image/
Not
reputatio
substantiated,
n
low impact, no
news item.
Attention
quickly
contained, short
term
recoverability.
Financial
loss

Additional costs/
funding/
wastages/
revenue
< 5% of initial
funds

Legal/
Minimal
complianc penalties.
e
Notice of
violation/
warnings
requiring
administrative
action.

Minor

Consequences
Moderate

Major

Catastrophic

Substantiated,
low impact,
low news
profile

Substantiated,
public
embarrassment,
moderate local
news profile.
Escalating
customer
implications.

Substantiated, public
embarrassment, high
news profile, third
party action. Long
term damage to
public image.

Substantiated,
public
embarrassment,
highly widespread
news profile, third
party action/ Global
media coverage.

Additional
costs/ funding/
wastages/
revenue
Between 6 to
15%

Additional costs/
funding/
wastages/
revenue
Between 16 to
25%

Additional costs/
funding/ wastages/
revenue
Between 25 to 40%

Additional costs/
funding/ wastages/
revenue
Above > 41%

Moderate
fines.

Substantial
penalties.

Substantial, may
include criminal
charges.

Major scrutiny and

investigation

Routine
governing
body litigations
subject to
moderate fines
and penalties
may be subject
to regulatory
proceedings
and/ or

Routine litigation
subject to
substantial fines
or penalties,
subject to
regulatory
proceedings
and/or hearings.

Potentially a
significant governing
body scrutiny,
investigations
subject to substantial
fines and penalties,
which may include
some criminal
charges, subject to
regulatory

Major scrutiny,
investigations
subject to
substantial fines
and penalties
including criminal
charges, and/or
cease-and-desist
orders, possible
regulatory action.

Impact parameters (2)

Factor
Insignificant
Example Risk measurement
Stakeholde Minimal
rs customer
customers Complaints
and recovery
costs.

Minor

Consequences
Moderate

Major

Catastrophic

Minimal decline
in customer
relationships and
some recovery
costs.

Loss or decline
of customer
relationships and
moderate
recovery costs

Strained key
customer
relationships and
significant recovery
costs and threat to
future growth.

Loss of major
customer
relationships and
serious threat to
future growth.

Stakeholde Insignificant
rs impact on
employees ___Department
s ability to
recruit and
retain
employees

Some impact on
___Departments
ability to recruit
and retain
employees.

Significant
impact on
__Departments
ability to recruit
and retain top
performers.

Major impact on
___Departments
ability to recruit top
performers.

Sustained impact on
___ Departments
ability to recruit and
retain top
performers.

Risk

consequenc
es/

manageme
nt effort

A serious
event which
requires
additional
management
effort

Program or
project re-design,
re-approval and
re-do required.
Fundamental
rework before
objective can be
met.
A critical event
which requires
extraordinary
management
effort

Project or
program
irrevocably
finished, objective
will not be met.
Disaster with
potential to lead
to collapse

STRATEGIC VIEW:
STRATEGIC PLAN
REQUIRES MAJOR

STRATEGIC VIEW:
MANDATE OF THE
ORGANISATION 3

Negligible
effects
Impact can
be readily
absorbed
through
normal
activity

STRATEGIC
VIEW:
NORMAL
IMPACT
ASSOCIATE
D WITH
PROGRAM

Normal
administrative
difficulty
An adverse
event which
can be
absorbed with
some
management
effort

STRATEGIC VIEW:
DELAY IN
FULFILLING
THE MANDATE
OF THE
INSTITUTION

STRATEGIC VIEW:
DELAY IN
ACCOMPLISHI
NG PROGRAM
OR PROJECT
OBJECTIVES

Likelihood parameters
Description

Risk likelihood description

Rare

Event may occur only in exceptional circumstances, e.g. approximately below

5% chance of occurring in the next 12 months

Unlikely

The event could occur at some time, e.g. approximately below 25% but above
5% chance of occurring in the next 12 months

Moderate

The event might occur at some time, e.g. approximately below 50% but above
25% chance of occurring in the next 12 months

Likely

The event will probably occur in most circumstances, e.g. approximately below
95% but above 50% chance of occurring in the next 12 months

Almost certain

The event is expected to occur in most circumstances, e.g. approximately

above 95% chance of occurring in the next 12 months

Control effectiveness
An assessment of the effectiveness of the organisations control
environment in managing a particular risk after due consideration is
given to the external environment factors.
Satisfactory

Controls are strong and operating properly providing a reasonable

level of assurance that objectives are being achieved.

Some
weaknesses

Some control weakness/inefficiencies have been identified. Although

these are not considered to present a serious risk exposure,
improvements are required to provide reasonable assurance that
objectives will be achieved.

Weak

Controls do not meet an acceptable standard, as many

weaknesses/inefficiencies exist. Controls do not provide reasonable
assurance that objectives will be achieved.

Risk matrix

Likelihood of Occurrence

Almost certain

Significant

Significant

High

High

High

Moderate

Significant

Significant

High

High

Moderate

Low

Moderate

Significant

High

High

Unlikely

Low

Low

Moderate

Significant

High

Rare

Low

Low

Moderate

Significant

Significant

Insignificant

Minor

Moderate

Major

Catastrophic

Likely

Magnitude of Impact