What defines the expression of possible loss or negative outcome expressed in terms of probability and severity?

The concept being described refers to the definition of risk in relation to operational risk management. Risk is often characterized as the potential for loss or a negative outcome, which can be quantified in terms of two primary factors: probability and severity. Probability pertains to the chance of a negative event occurring, while severity addresses the extent of the potential impact should such an event happen.

In the context of ORM, understanding risk is essential for effective decision-making and for implementing controls to mitigate those risks. It helps organizations identify, assess, and prioritize risks, enabling them to allocate resources and manage their operations more effectively. Thus, the definition captures the essence of risk management by encompassing both the likelihood of an event and its potential consequences, which is foundational to the ORM process.