Markrisk

Markrisk is a structured approach to risk assessment used in finance, operations, and project management to quantify and aggregate risk into a single, observable score. The core idea is to assign a mark to individual risk factors based on likelihood and potential impact, then combine these marks to produce an overall Markrisk score that informs decisions and governance.

In typical implementations, risk factors are identified across domains such as market risk, credit risk, operational risk, liquidity risk, and regulatory or compliance risk. Each factor receives a rating on a common scale (for example 1 to 5), representing probability and severity. These ratings are weighted to reflect context, materiality, and interdependencies, and then aggregated through an explicit model (additive, multiplicative, or hybrid) to yield the composite score.

Markrisk scores are used to set risk limits, allocate capital or buffers, prioritize controls, and drive scenario analysis or stress testing. In project settings, Markrisk can support prioritization of mitigation actions and contingency planning. Organizations typically pair the score with practical indicators and visual dashboards to support monitoring and governance.

Critics note that Markrisk, like other score-based frameworks, is sensitive to input selection, weighting, and model choice, which can obscure risk if not transparently managed. Proponents argue it provides a clear, communicable metric that complements qualitative assessment.

Related concepts include risk management, risk scoring, scenario analysis, and model risk.