Risk Classification System (2024)

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  • Based on the TOGAF® Standard, Version 9.2, risk is pervasive in any enterprise architecture activity and is present in all phases within the Architecture Development Method (ADM). From a management perspective, it is useful to classify the risks so that the mitigation of the risks can be executed as expeditiously as possible. And risks are normally classified as time (schedule), cost (budget), and scope but they could also include client transformation relationship risks, contractual risks, technological risks, scope and complexity risks, environmental (corporate) risks, personnel risks, and client acceptance risks.

    Based on PESTLE analysis, there are 6 aspects of risk classification system such as:

    • Political, this factor determines the extent to which a government may influence the economy or a certain industry. These political factors include tax policies, fiscal policy, trade tariffs which may levy around the fiscal year and it may affect the business environment
    • Economic, this factor determines of an economy’s performance that directly impacts a company and have resonating long term effects. Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth patterns.
    • Social, this factor determines into consideration all events that affect the market and community socially. Social factors include cultural expectations, norms, population dynamics, healthy consciousness, career altitudes, global warming.
    • Technological, this factor determines of innovations in technology that may affect the operations of the industry and the market favorably or unfavorably. Technological factors include automation, research and development and the amount of technological awareness in market possesses.
    • Legal, this factor determines into account both of these angles and then charts out the strategies in light of these legislations. Legal factors include consumer laws, safety standards, labor laws.
    • Ethical or Environmental, this factor is determined by the surrounding environment. Environmental factors include but are not limited to climate, weather, geographical location, global changes in climate, environmental offsets, ground conditions, ground contamination, nearby water sources.

    This is the table of PESTLE risk classification systemRisk Classification System (1)

    There are several timescale of risk classification systems such as:

    1. A short-term risk (Immediately) has the ability to impact the objectives, key dependencies and core processes, with the impact being immediate. These risks can cause disruption to operations immediately when the event occurs.

    2. A medium-term risk (up to 1 year or decision makes) has the ability to impact the organization following a (short) delay after the event occurs. The impact of a medium-term risk would not be apparent immediately but would be apparent within months, or at most a year after the event.

    3. A long-term risk (up to 5 years) has the ability to impact the organization sometime after the event occurs. This impact could occur between one and five years or more after the event.

    There are following of risk classification system which adopted for capturing the result of risk assessment with three scoring level such as:

    • High-risk, risk which potential protection are required by law or that, if compromised can lead to significant impact on organization’s business, safety or finances. These examples are personal data, financial data, central data center, central administrative systems.
    • Moderate-risk, risk which have potential compromised, this risk can lead to noticeable impact on organization’s business, safety or finances. These examples are operational systems, official web sites, office computer, etc.
    • Low-Risk, risk which are not classified as high-risk or moderate-risk. These examples are demo systems, published research data.

    This is the example scoring level of risk classification

    Risk Classification System (2)

    REFERENCES ·

    https://www.irjet.net/archives/V3/i1/IRJET-V3I165.pdf · https://www.conocophillips.com/sustainability/managing-climate-related-risks/strategy/short-medium-long-term-risks/ · https://pubs.opengroup.org/architecture/togaf9-doc/m/chap27.html

    https://itsc.ust.hk/it-policies-guidelines/risk-assessment-classification-and-mitigation

    Risk Classification System (3)


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    Risk Classification System (2024)

    FAQs

    What is the risk classification system? ›

    Risk classification is used primarily in ratemaking when there is not sufficient information to estimate a price for a given individual. In order to derive a price, individuals that are expected to have the same costs are grouped together.

    What are the methods of risk classification? ›

    And risks are normally classified as time (schedule), cost (budget), and scope but they could also include client transformation relationship risks, contractual risks, technological risks, scope and complexity risks, environmental (corporate) risks, personnel risks, and client acceptance risks.

    What is the risk classification scale? ›

    These categories may include 0-2 low risk, 3-5 moderate risk, 6-8 high risk, or any varied combination.

    How to fill out a risk register? ›

    Filling out a Risk Register Template in 6 Steps
    1. Identify Risks.
    2. Describe Each Risk.
    3. Estimate Impact.
    4. Plan for Mitigation.
    5. Assign an Owner.
    6. Monitor Going Forward.

    What is a standard risk classification? ›

    Standard: This means typical risk, and for life insurers, it means an average life expectancy. You may have some health issues in your family or in your past, which keeps you out of more preferred risk groups, resulting in higher premiums.

    How many classification levels are there in the risk classification system? ›

    Information at MIT falls into one of three risk levels: Low, Medium, or High. Level classifications are based on who should have access to the information and how much harm would be done if it were disclosed, modified, or unavailable.

    What are the principles of risk classification? ›

    RISK CLASSIFICATION PROCESS

    The risk classes include one or more standard classes (the standard class may be subdivided into preferred risks and the remainder), and several substandard classes (from three or four to as many as ten or 12, depending on a company's marketing strategy).

    How to classify the risk level? ›

    Risks should be assessed by impact and likelihood, whilst issues and events are normally only classified by impact. The classification criteria for Impact should include: Both financial and non-financial considerations. It should be determined on the basis that the risk or issue has crystallised or an event has ...

    How do you classify risk factors? ›

    In general, risk factors can be categorised into the following groups:
    1. Behavioural.
    2. Physiological.
    3. Demographic.
    4. Environmental.
    5. Genetic.

    What is risk based classification? ›

    GHTF created the risk classification system to determine the level of pre-market regulatory control that is required for an IVD, with the purpose that these controls are sufficient for each class to safeguard the health and safety of patients, users and other persons.

    How do you Categorise risk? ›

    The three main risk categories include internal risks, external risks, and strategic risks. Internal risks include preventable threats like technological hiccups and human resource factors like talent acquisition.

    What is the risk classification matrix? ›

    The risk assessment matrix works by presenting various risks as a chart, color-coded by severity: high risks in red, moderate risks in yellow, and low risks in green. Every risk matrix also has two axes: one measuring the likelihood of occurence and one measuring impact.

    Who can fill out a risk assessment form? ›

    Who should undertake a Risk Assessment?
    • Only competent staff should conduct Risk Assessments. ...
    • Ideally, the person with the knowledge to identify the risks involved and implement the control measures should be the one to complete the Risk Assessment.
    Feb 23, 2024

    What does a good risk register look like? ›

    At a minimum, each risk filed into a risk register should contain a description of the risk, the impact to the business if the risk should occur (e.g. costs), the probability of its occurrence, the risk owner(s), how it ranks overall relative to all other risks, and the risk response.

    How do you fill out a risk assessment table? ›

    How to Do a Risk Assessment Matrix
    1. Step 1: Identify Hazards. Relating to your scope, brainstorm potential hazards. ...
    2. Step 2: Calculate Likelihood. ...
    3. Step 3: Calculate Consequences. ...
    4. Step 4: Calculate Risk Rating. ...
    5. Step 5: Create an Action Plan. ...
    6. Step 6: Plug Data into Matrix.

    What are the 4 main categories of risk? ›

    The main four types of risk are:
    • strategic risk - eg a competitor coming on to the market.
    • compliance and regulatory risk - eg introduction of new rules or legislation.
    • financial risk - eg interest rate rise on your business loan or a non-paying customer.
    • operational risk - eg the breakdown or theft of key equipment.

    What is the Pestel risk classification system? ›

    PESTLE Technique is a strategic management technique which can be used effectively in external risk identification process of Risk Management Plan. It identifies risks under various subgroups under broad headings of Political , Economical , Social , Technological , Legal , Environmental.

    What is the risk classification for all? ›

    Acute lymphoblastic leukemia (ALL) can be considered standard risk, high-risk, or very high-risk.

    References

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