In risk assessment, how is risk quantified?

In the context of risk assessment, quantifying risk as the product of likelihood and consequence is a well-established approach. This method focuses on two critical dimensions of risk: how probable an adverse event is (likelihood) and the potential impact of that event should it occur (consequence).

Likelihood refers to the probability of a threat exploiting a vulnerability, which leads to a cybersecurity incident or failure. Consequence considers the impact or damage that could result from such an event, encompassing various factors such as financial loss, reputational damage, regulatory penalties, or operational disruption.

By calculating risk using this formula, organizations can prioritize their cybersecurity resources and responses based on where they stand to face the most significant potential harm. This approach allows for a clearer understanding of risk tolerance and aids in the development of risk mitigation strategies that are proportionate to the risk levels identified.

Other methods mentioned in the choices do not effectively capture the essence of risk quantification in the context of cybersecurity. For example, simply representing risk as a product of threats and vulnerabilities fails to account for the potential impact of those threats and does not provide a complete picture of risk management.