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# 5 Types of Risk Estimates

, updated on September 02, 2017 Risk estimates are forecasts of the probability and impact of risks. They are used to manage risks. For example, they can be used to measure risk exposure and risk reduction. The following are common types of risk estimate.

## Basic

A single estimate of probability and impact based on historical comparisons and/or the opinions of subject matter experts. For example, a product development team estimates the risk that a product will fail on the market as a 20% chance of a \$100,000 loss.
Risk Exposure = 0.2 x 100,000 = \$20,000
The risk exposure calculation is an estimate of the probable cost of a risk. It isn't an upper bound on risk.

## Probability-Impact Matrix

A single estimate of probability and impact is often overly simplistic as there may be many levels of potential impact, each with a separate probability of occurring. A more accurate risk estimate can often be obtained with a matrix of probabilities and impacts. ## Probability Distribution

A more detailed risk estimate can be represented with a smooth curve that gives you a probability for every possible impact. ## Parametric Estimates

Risk estimates that go beyond the educated guesses of subject matter experts to calculate risk probabilities and impacts using formulas or algorithms based on a number of parameters. Such calculations are industry and risk specific.

## Reference Class Forecasting

Developing or validating risk estimates using data about historical losses that occurred with comparable strategies, operations or projects. For example, risk estimates for an infrastructure project based on a database of historical infrastructure projects of similar magnitude. If projects in your industry have a 20% failure rate and your risk estimate is 3%, you might be missing something.
 Overview: Risk Estimates Type Definition Forecasts of the probability and impact of risks. Related Concepts

## Risk Management

This is the complete list of articles we have written about risk management.
Acceptable Risk
Calculated Risk
Contingency Plan
Contingency Planning
Disaster Preparedness
Economic Risk
ERM
Financial Risk
Innovation Risk
Insurance
Investing Risk
Moment Of Risk
Plan Template
Political Risk
Positive Risk
Project Risk
Reputational Risk
Residual Risk
Resilience
Resource Risk
Risk
Risk Acceptance
Risk Analysis
Risk Appetite
Risk Awareness
Risk Capacity
Risk Communication
Risk Contingency
Risk Control
Risk Culture
Risk Estimates
Risk Evaluation
Risk Exposure
Risk Impact
Risk Intelligence
Risk Management
Risk Matrix
Risk Measurement
Risk Mitigation
Risk Monitoring
Risk Objectives
Risk Prevention
Risk Probability
Risk Profile
Risk Reduction
Risk Register
Risk Response
Risk Sharing
Risk Taking
Risk Tolerance
Risk Treatment
Risk Trigger
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Special Risks
Strategy Risk
Tactical Risk
Technology Risk
Unknown Risks
Upside Risk
More ...

## Risk Management

An overview of the risk management process.

## Risk Evaluation

The basic steps of risk evaluation.

## Risk Response

The common types of risk response.

## Risk Exposure

A definition of risk exposure with example calculations.

## Risk Monitoring

The common elements of risk monitoring.

## Acceptable Risk

A definition of acceptable risk with examples.

## Minimax Criterion

The definition of minimax criterion with examples.

An overview of common business risk management techniques.

## Technology Risk Management

A reasonably comprehensive overview of technology risk management.

## Risk Analysis

A complete guide to risk analysis.

## Risk Probability

The common ways to model risk probability.

## Qualitative Risk Analysis

A definition of qualitative risk analysis with an example.

## Cost Of Risk

A definition of cost of risk with examples.

## Risk Perception

A definition of risk perception with examples.

## Risk vs Hazard

The difference between a risk and a hazard with examples.

## Swot Threats

A list of threats for SWOT analysis.

## What-if Analysis

The definition of what-if analysis with examples.

## External Factors

A list of common external factors.
The most popular articles on Simplicable in the past day.

## New Articles

Recent posts or updates on Simplicable.
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