As already mentioned in the last blog post Why is risk management so important for a company, the evaluation criteria that best suit the company must be defined individually and described in the risk process.

To simplify things, we will give you a simple generic example of sensible evaluation criteria and their scaling in risk management:

1. Probability of occurrence (how likely is it that the risk will occur?)

Scaling:

1 – Low: <10% probability, rare or unlikely (e.g. occurs once every 10 years).
2 – Medium: 10-50% probability, occasionally possible (e.g. occurs about once a year)
3 – High: >50% probability, likely or frequent (e.g. occurs monthly).

2. Degree of impact (How strongly does the risk influence the project, the organization or the process?)

Scaling:

1 – Low: No or low impact; easily correctable, no major damage (e.g. minor delays).
2 – Medium: Moderate impact; higher costs, operational impairments, short-term solutions required.
3 – High: Severe impact; significant costs, long-lasting damage, jeopardizes project or reputation.

3. Risk priority (combination of probability of occurrence and impact)

The priority is shown in a risk matrix:

Impact ↓ / Probability →	low (1)	medium (2)	high (3)
low (1)	low	low	medium
medium (2)	low	medium	high
high (3)	medium	high	critical

In the case of “critical”, appropriate measures must be introduced immediately. The risks should also be reduced with appropriate measures if they are “high”. In the case of “medium”, it is important to keep an eye on these risks and plan measures as soon as resources are available. In the case of “low”, there is certainly time to plan measures to reduce them.

So when is something “good”?

Good: Risks are in the “low” range (e.g. green on a traffic light scale). There is little or no urgency here.

Not yet good: Risks in the “medium” (yellow) or “high” (red) range must be actively managed.

This scale allows you to clearly assess, prioritize and efficiently address risks.

Why can Team.Niggemann support you in risk management?

With our experience in quality management and audits, we offer practical solutions for effective risk management. Our approach is individual and industry-specific, so that we:

• Identify and assess risks in a structured way,
• provide practical assessment models and tools,
• develop action plans that are realistic and feasible, and
• sustainably strengthen your teams through training and workshops.

Team.Niggemann stands for quality, efficiency and long-term security – values that make every company stronger.