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Risk Quantification

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Risk Quantification

FAIR (Factor Analysis of Information Risk) methodology for quantifying risks in financial terms. Uses Monte Carlo simulation to estimate loss exposure ranges.

Key Elements

  • Risk scenarios — Predefined threat scenarios to analyze.
  • Analysis parameters — Loss Event Frequency (LEF), Loss Magnitude (LM) ranges.
  • Results — Value at Risk (VaR), expected annual loss, loss exceedance curves.

How to Run a Risk Analysis

  1. Select or create a risk scenario.
  2. Set frequency and magnitude parameters using PERT distributions.
  3. Run the Monte Carlo simulation.
  4. Review the financial loss range and VaR at different confidence levels.