When assessing risk, it’s crucial to determine the potential impact of a threat exploiting a vulnerability. The impact can be assessed across several dimensions:

1. Life

• Definition: The potential harm to human life or safety.
• Impact Assessment: Consider the effects of a risk event on individuals’ health and safety. For example, a failure in a critical healthcare system could endanger patient lives.

2. Dollars

• Definition: The financial impact of a risk event.
• Impact Assessment: Evaluate the monetary loss or expense resulting from a risk event. This includes direct financial losses, legal fees, regulatory fines, and costs associated with recovery and remediation. For instance, a data breach might lead to significant costs in terms of legal settlements, regulatory fines, and loss of business.

3. Prestige

• Definition: The impact on an organization’s reputation and public perception.
• Impact Assessment: Assess how a risk event might affect the organization’s brand, public trust, and customer confidence. A high-profile security breach or ethical scandal could damage an organization’s prestige, leading to long-term negative effects on customer loyalty and market position.

4. Market Share

• Definition: The effect on an organization’s position within the market.
• Impact Assessment: Determine how a risk event might influence the organization’s competitive position and market share. For example, if a company’s product is found to have a critical security flaw, it could lose market share to competitors and face a decline in sales.

Impact Assessment Steps

1. Identify Potential Impacts
   • Life: Assess risks that could threaten human safety.
   • Dollars: Calculate potential financial losses.
   • Prestige: Evaluate the potential damage to the organization’s reputation.
   • Market Share: Analyze the possible effects on market position and sales.
2. Quantify the Impact
   • Life: Consider factors such as potential fatalities or injuries.
   • Dollars: Use financial data and estimates to gauge the cost.
   • Prestige: Evaluate potential impacts on public perception and customer trust.
   • Market Share: Estimate potential loss of market share or revenue.
3. Prioritize Based on Impact
   • Assign priority to risks based on their potential impact in each of these areas. This helps in focusing resources on the most critical risks.
4. Develop Mitigation Strategies
   • Implement strategies to mitigate the most significant impacts. For example, enhancing safety protocols, increasing financial reserves, managing public relations, and addressing market concerns.

Example

• Scenario: A major data breach in a financial institution.
  • Life: Minimal impact, but indirect effects on individuals’ privacy.
  • Dollars: Significant financial loss due to fines, legal fees, and remediation costs.
  • Prestige: Severe damage to the institution’s reputation, leading to loss of customer trust.
  • Market Share: Potential loss of market share to competitors due to diminished customer confidence.

Understanding and assessing these impact dimensions helps organizations prioritize their risk management efforts and develop effective strategies to protect their assets, reputation, and operational continuity.