How does FAIR define "Risk" in a business context?

FAIR defines "Risk" in a business context as the probable frequency and magnitude of future loss. This definition is rooted in the concept of quantifying risk in terms of potential future losses that can occur due to certain events, like data breaches or system failures. By focusing on both the likelihood (probable frequency) and the financial impact (magnitude), FAIR provides a framework that allows organizations to understand and prioritize their risk exposure effectively.

This understanding enables businesses to make informed decisions regarding resource allocation for risk management and mitigation strategies. It highlights the importance of not just assessing past incidents but looking ahead to what might occur in the future and how it could financially affect the organization. This forward-looking perspective is essential for proactive risk management in today's dynamic business environment.