The level of risk is determined by multiplying the impact of an adverse event by the likelihood of that event occurring1 . The impact of an adverse event is the degree of harm or loss that would result from the event, such as financial loss, reputation damage, legal consequences, or safety hazards1 . The likelihood of an adverse event is the probability or frequency of the event happening, based on historical data, expert judgement, or statistical analysis1 . The other options are not correct formulas for calculating risk. Option A confuses the cost of preventing an adverse event with its impact. Option B confuses the cost of possible legal action with its likelihood. Option D uses two synonyms for likelihood (probability and frequency) instead of combining it with impact.