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Chapter 1: Q130Q (page 38)

Question: The assessment of the probability of a negative event against the aggregate severity of the related loss is called ____________________ .

Short Answer

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Answer

Risk mapping

Step by step solution

01

Defining risk mapping

Risk mapping is concerned with depicting the company's risk by visualizing it on a map. These maps tell the severity of the risk that a company might encounter.

02

Purpose of risk mapping

Risk mapping helps to identify the risks that have a great threat to the company. It helps the company to prioritize the risks and take action toward it. The risks with high likelihood are the one that needs the most attention; otherwise, they can become a threat to the company. Heat maps also show the likelihood of the risk. The risk with the warmest tones like red needs immediate attention.

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