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Risk, risk matrix and ALARP

Risk is often defined as probability times consequence, so that measures can be prioritized against what is both likely and severe. A risk matrix visualizes this on two axes. ALARP ("As Low As Reasonably Practicable") means risk should be reduced as far as is practically possible, not necessarily to zero.

Risk=probability×consequence\text{Risk} = \text{probability} \times \text{consequence}basic risk formula

Example

Probability 0.0010.001 per year, consequence 50,000 kr:

Expected annual loss =0.001⋅50.000=50= 0.001\cdot 50.000 = 50 kr.

High probability with low consequence can give the same risk as low probability with high consequence — both must be assessed.
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Part of Statistics and Risk Analysis: Inference and risk.