What is the difference between Expected loss and Potential loss in risk events?

Sara Kiyono
Tera Contributor

4 hours ago

Hi, everyone.

 

Risk events have "Expected loss" field and "Potential loss" field. What functional differences exist between them?

I have confirmed that entering values into the Expected loss field reflects the Expected loss figure at the top of the Risk Workspace form screen. 

Reference Materials.png

 

The documentation mentioned the following, but I couldn't determine what functional differences exist in ServiceNow. Specifically, I didn't understand where the value entered for the "Potential loss" field would be reflected.

 

Expected loss:Amount of loss expected. Expected loss is the probability weighted average of all possible losses. This amount is based on the user’s judgment of the expected amount that the organization might lose.

Potential loss:Amount expected to be a potential loss due to the risk event. This amount is the maximum loss an entity can incur due to the loss from the risk event.

 

If anyone knows anything, please let me know in the comments.

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SumanthDosapati
Mega Sage

31m ago - last edited 30m ago

@Sara Kiyono 

 

  • Expected loss = Average loss you expect, considering how likely the risk is.

  • Potential loss = Worst-case loss if the risk actually happens.

Example:

  • A system outage could cost $100,000 at worst -> Potential loss = $100,000

  • You think there’s a 20% chance it will happen ->
    Expected loss = 20% × $100,000 = $20,000

 Expected loss = likely impact
 Potential loss = maximum impact

 

Accept the solution and mark as helpful if it does, to benefit future readers.
Regards,
Sumanth

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