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Risk = Threat × Vulnerability

To have risk, a threat must connect to a vulnerability. This relationship is stated by the formula:

Risk = Threat × Vulnerability

You can assign a value to specific risks using this formula. Assign a number to both threats and vulnerabilities. We will use a range of 1–5 (the range is arbitrary; just keep it consistent when comparing different risks).

Learn by Example

Earthquake Disaster Risk Index

Risk is often counterintuitive. If you ask a layperson whether the city of Boston or San Francisco had the bigger risk to earthquakes, most would answer “San Francisco.” It is on the California coast near the famous Pacific Ocean “Ring of Fire,” and has suffered major earthquakes in the past. Boston is in the northeast, which has not suffered a major earthquake since colonial times.

Rachel Davidson created the Earthquake Disaster Risk Index, which is used to judge risks of earthquakes between major world cities. Details are available at: https://www.sciencedaily.com/releases/1997/08/970821233648.htm.

She discovered that the risk of earthquakes to Boston and San Francisco was roughly the same: “Bostonians face an overall earthquake risk comparable to San Franciscans, despite the lower frequency of major earthquakes in the Boston area. The reason: Boston has a much larger percentage of buildings constructed before 1975, when the city incorporated seismic safety measures into its building code” [^11].

Compared to Boston, the threat of an earthquake in San Francisco is higher (more frequent earthquakes), but the vulnerability is lower (stronger seismic safety building codes). Boston has a lower threat (fewer earthquakes), but a higher vulnerability (weaker buildings). This means the two cities have roughly equal risk.

Using a scale of 1–5, here is San Francisco’s risk, using the risk = threat × vulnerability calculation:

  • San Francisco threat: 4
  • San Francisco vulnerability: 2
  • San Francisco risk: 4 × 2 = 8

Here is Boston’s risk:

  • Boston threat: 2
  • Boston vulnerability: 4
  • Boston risk: 2 × 4 = 8