In the context of risk management, "impact" refers to what?

In risk management, "impact" specifically refers to the effect that a risk event can have on an organization's assets, operations, or overall objectives. This includes understanding how a specific risk could hinder processes, incur costs, affect reputation, or disrupt workflows. Assessing the impact is crucial because it helps organizations prioritize risks based on potential consequences rather than just their likelihood of occurrence. By focusing on the impact, organizations can make informed decisions about where to allocate resources and how to implement appropriate risk mitigation strategies, ensuring that they protect critical functions and maintain stability in operations. This understanding leads to a stronger framework for managing risks effectively within any organization.