The crisis caused by the coronavirus (COVID-19) has revealed the vulnerabilities and deficiencies of the conception of management systems in all areas of society (political, health, social, economic, and industrial, educational). The full impact of the pandemic and its magnitude are still unknown. However, the first consequences can already be recognised in the increasing debt of individuals and states, as well as the serious damage to businesses, the rising unemployment rate, and the potential risk of poverty for a large part of the population.

This crisis has highlighted the importance of implementing an effective risk management system, not merely a token one. It has also proved the need to develop such a system from the bottom up, considering the risks over which managers have control, and from top to bottom, assessing strategic risks that can have a huge impact on an organisation.

According to the International Standard ISO 31000 on Risk Management, a risk is the effect of uncertainty on objectives and an effect is a positive or negative deviation from what is expected. On the other hand, risk management consists of coordinated activities to direct and control an organisation regarding risk.

Discuss the process of the risk severity evaluation with detailed calculations and measurement with stated examples.