What is the term for analyzing the likelihood and severity of a loss?

The term for analyzing the likelihood and severity of a loss is "risk." In this context, risk assessment involves evaluating the potential for negative outcomes and the impact they could have on an organization or system. This process helps in identifying the various factors that contribute to risk, including both the probability of an event occurring and the consequences should that event occur. Understanding risk is essential for decision-making in fields such as engineering, finance, and safety management, as it allows professionals to implement strategies to mitigate or manage potential losses effectively.

Analysis of risk enables organizations to prioritize their efforts in risk management by focusing on the most significant threats and opportunities, ultimately leading to better resource allocation and enhanced safety protocols.