What is the classification for a loss that exceeds $5 million?

In the context of risk management and loss classification, a loss that exceeds $5 million is considered to fall into the "Severe risk" category. This classification typically reflects the potential impact of the loss on the organization, indicating that it could have significant financial consequences, affecting not only immediate cash flow but also possibly the long-term viability of the organization.

Severe risk classifications are associated with substantial loss amounts that may overwhelm typical risk tolerance thresholds established by organizations. These thresholds help in understanding the level of resources that may need to be allocated for mitigation, response, and recovery efforts.

Classification systems often use terminology that reflects the severity of potential losses: "High," "Medium," and "Low" risks generally describe progressively lesser impacts. Since a loss exceeding $5 million likely indicates critical financial stress, acknowledging it as "Severe risk" emphasizes the urgency with which organizations should approach risk management, ensuring appropriate measures are in place to prevent such losses or to manage their ramifications.