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Risk Scoring

Enterprise Risk Management developed inventory scales and a scoring formula for use in ranking assessed risks across all units.  

Risk Inventory Scales

Identified risks should be assessed by the units involved based on the inventory scales provided for the following factors: likelihood of a risk event to occur, potential impact (severity), velocity and cascading effect of the risk.

ERM Forms

 

Likelihood or Frequency of Risk (L)

Score

Likelihood or Frequency

Description

1

Unlikely

Less than 5% chance of occurrence or recurrence; has not happened in recent past or unlikely to happen in foreseeable future

2

Uncommon or infrequent

5-25% chance of occurrence or recurrence; could happen or has happened once or twice

3

Possible or occasional

26-49% chance of occurrence or recurrence; approaching a toss-up for possibility or occurs now and then

4

Likely or common

50-74% chance of occurrence or recurrence; surprised if this were not to occur or occurs regularly

5

Almost certain or inevitable

75% or greater chance of occurrence or recurrence; will happen or occurs constantly

Severity (S)

Score

Impact

Human Capital

Health & Safety

Financial

Operational

Reputational

1

Minor

Affects <5% of employees

No Collective Bargaining Impacts

No impact on recruitment or retention

Minor injury

Minor reparable environmental damage  

<$15,000

No disruption of critical operations or services

1-2 day disruption for one department

No effect on leadership

Minor impact on other programs and services

Limited negative publicity

No effect on NIU reputation/image

2

Moderate

Affects 5-10% of employees

CBA* required

<5% employee turnover

Moderate injury

Moderate reparable environmental damage

$16,000-$100,000

3-5 day disruption for several departments or one critical service

Moderate effect on leadership

Moderate impact on other programs and services

Local/regional negative publicity

Minor short-term effect on reputation

3

Substantial

Affects 11-25% of employees

CBA* required

6-9% employee turnover

Substantial injury

Substantial environmental damage requiring mitigation

$101,000-$300,000

6-10 day disruption of one college, school, division or several critical services

Substantial impact on leadership

Substantial impact on other programs and services

Local/regional negative publicity

Pressure for NIU to control the message

Moderate damage to reputation

4

Serious

Affects 26-50% of employees

CBA* required

10-15% employee turnover

Serious injury

Environmental damage requiring regulatory agency reporting

$301,000-$3,000,000

10-14 day disruption of two or more colleges, schools or divisions or three or more critical services

Serious impact on leadership

Serious impact on other programs and services

National negative publicity

Intense pressure for NIU to control the message

Significant damage to reputation

5

Severe

Affects 51-75% of employees

CBA* required

16-24% employee turnover

Severe injury or death

Environmental damage requiring regulatory agency reporting and possible intervention

$3,000,000- $20,000,000

14 day-3 month disruption of two or more colleges, schools, or divisions or most critical services

Severe impact on leadership

Severe impact on other programs and services

National negative publicity

NIU cannot control the message

Severe long term damage to reputation

6

Business Critical

Affects greater than 75% of employees

CBA* required

>25% turnover

Multiple injuries or deaths

Irreparable environmental damage

>$21,000,000

NIU shutdown for greater than three months

Insolvency

Leadership failure results in long-term damage  

Negative publicity could impair NIU’s image or reputation

Significant decrease in enrollment or funding

*CBA – Collective Bargaining Agreement

Velocity (V)

Score

Description

5

Assigned to a given risk if there would not be time to control or mitigate the immediate effect of the severity of that risk in the event it occurred (e.g., a power blackout)

0

Assigned to all other risks

Cascading Effect (C)

Cascading indicator is applied to cases where a risk event occurring in one unit or area of campus would have significant effects in multiple areas on campus.

Score

Cascading Effect

Description

1

Limited

A loss may impact risk owner’s department or a few additional departments

2

Moderate

A loss may impact several departments up to an entire division

3

Significant

A loss may impact several divisions or the institution as a whole

These indicators are used to rank risks with the same overall score, placing those with significant cascading effect at a higher weighted risk.


Risk Scoring Formula

After scores are submitted by the units involved, Enterprise Risk Management uses a standard risk scoring formula to calculate weighted risk scores and rank assessed risks across all units.