Semi-quantitative risk assessment

Category: Risk identification & assessment · Reviewed by Mark Fox, Broker · Renewals · Last reviewed

Semi-quantitative risk assessment

Semi-quantitative risk assessment sits between qualitative and quantitative approaches. It uses numerical scales but those scales are ordinal or banded rather than continuous: likelihood of 1–5, impact of 1–5, with each band anchored to a defined probability range or monetary value.

Practical form

• Likelihood bands defined as probability ranges (1: <1%, 2: 1–5%, 3: 5–25%, 4: 25–75%, 5: >75% per year).
• Impact bands defined as £ ranges (1: <£10k through to 5: >£10m).
• Optional weighting of categories of impact (financial, reputational, regulatory, people, environment).
• Aggregate score by look-up matrix, not by multiplication.

When to use

• Risk registers in mid-market organisations where full QRA is impractical.
• Operational risk frameworks in insurers and intermediaries.
• Insurer board-level dashboards reporting on multiple risk types.

Avoiding the multiplication trap

Multiplying ordinal scores is mathematically meaningless and can produce decision errors (Cox, 2008). The recommended approach is a look-up matrix in which each cell colour is set by independent judgement, not arithmetic.

References

• IEC 31010:2019.
• Cox, L.A. (2008). What’s Wrong with Risk Matrices? Risk Analysis 28(2).
• HSE INDG163.

Cross-references

• Quantitative risk assessment
• Qualitative risk assessment
• Risk matrix

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