Timescale of risk impact
Risks can be classified in many ways. Hazard risks can be divided into many types of risks, including risks to property, risks to people and risks to the continuity of the business. There are a range of formal risk classification systems and these will be considered in a later part of this book. Although it should not be considered to be a formal risk classification system, this part considers the value of classifying risks according to the timeframe for the impact of the risk.
Hazard, control and opportunity risks
We have already seen in Chapter 1 that risks can be divided into three categories: Definitions of these three types of risk are also given in Appendix A. They are:
• hazard risks;
• control risks;
• opportunity risks.
Hazard tolerance
As discussed earlier in this part, organizations face exposure to a wide range of risks. These risks will be hazard risks, control risks and opportunity risks. Organizations need to tolerate a hazard risk exposure, accept exposure to control risks and invest in opportunity risks.