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4 Examples of Acceptable Risk

 , August 14, 2017
Acceptable risk is a risk exposure that is deemed acceptable to an individual, organization, community or nation. Acceptable risks are defined in terms of the probability and impact of a particular risk. They serve to set practical targets for risk management and are often more helpful than the ideal that no risk is acceptable. In practice, risk often can't be reduced to zero due to factors such as cost and secondary risk. The following are illustrative examples of acceptable risk.


A proposed tsunami shelter is constructed to withstand a 12 meter, or 39 foot, tsunami. Models indicate that a tsunami larger than 12 meters will strike the area once every 1300 years. This risk is published to the community and accepted as part of the project approval process.


A jet engine has a historical failure rate of 0.4 per million departures. Regulators and customers generally view this as an acceptable level of risk.


A bicycle manufacturer depends on a single supplier for tires. Without a supply of these tires, production will cease and revenue will decline. The probability of a major supply disruption is forecast to be 0.6% per annum. The management of the company decide to accept this risk.


A snowboarder estimates a 20% chance of a broken bone in a season. They decide this is acceptable given the rewards they find in the sport.
Overview: Acceptable Risk
DefinitionA risk exposure that is deemed acceptable to an individual, organization, community or nation.
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