What is severity in composite risk management?

In composite risk management, severity refers to the potential impact or consequences of a risk event occurring. It evaluates how damaging a risk could be, should it materialize, and is often assessed in terms of financial loss, operational disruption, or harm to individuals and the environment. Understanding severity helps organizations prioritize risks and allocate resources effectively to mitigate potential impacts. By analyzing both the likelihood and severity of risks, decision-makers can develop comprehensive strategies to manage overall risk exposure.