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Table 4 Prioritizing threats

From: Managing project risks and uncertainties

Method Procedure Advantages Disadvantages
Impact assessors rating Rates impacts on ordinal scale for consequence (nature, extent, duration, intensity, irreversibility) & likelihood. Widely used. Complex consequence rating. Assumes threats absolute not relative to context. Uses circular logic: threat is significant because it needs mitigation; threat needs mitigation so it is significant. Overlooks Black Swans.
Qualitative rating Rates threats for likelihood & consequence as low, medium or high, and portrays threat significance as combination of likelihood and consequence. Simple. Assumes threats absolute not relative to context. Might not discriminate sufficiently. Overlooks Black Swans.
Ordinal rating related to context Rates threats for likelihood and consequence on ordinal scale, scores threat severity as rated likelihood x rated consequence, relates severity to society's laws and norms. Simple. Cost-effective for screening many threats. Enables different threats to be compared in common currency. Relates to context. Does not value expected loss. Overlooks Black Swans.
Probability-cost Uses the convention that value of threatened loss is product of probability (p lies between 0.0 and 1.0) and the loss in monetary terms. Repeatable. Monetary loss directly concerns project cost. Can be costly to determine. Unsuitable for screening many threats. Assumes threat severity relates to monetary value whereas operative criteria might be legality and stakeholders values and norms. Overlooks Black Swans.