Many companies use a combination of impact and likelihood to assess risk. But this is potentially flawed. The predictive value of likelihood for any of the major catastrophes that have occurred in recent years is effectively zero. How likely was September 11? How likely was the tsunami that devastated Aceh and other parts of the Indonesian archipelago? Likelihood is not a good predictor. A more valuable approach is to determine what scenarios and events can really hurt your organisation and then determine whether or not you’re vulnerable to those scenarios.

In this interview, Deloitte & Touche LLP USA Principal Rick Funston argues that this assessment of vulnerability is much more useful in terms of what your organisation needs to prepare for.

Download the attachment below for the full interview.

Attachment
Balancing Risks and Rewards (PDF, 152 KB)
Deloitte US report