What defines a risk's importance based on its potential impact and likelihood?

The term that defines a risk's importance based on its potential impact and likelihood is risk level. Understanding risk level requires evaluating both the severity of the impact that a risk could cause if it materializes and the probability of that risk occurring. This assessment allows teams to prioritize risks and determine their significance to the project or organization.

When classifying risks, it’s essential to consider how high the potential impact could be on objectives and operations, alongside how likely it is for that risk to manifest. As a result, the calculated risk level becomes a crucial metric for guiding decision-making processes, resource allocation, and developing mitigation strategies.

Other options like risk mitigation, risk assessment, and risk analysis are related concepts but do not specifically encapsulate the notion of defining a risk's importance through impact and likelihood. Risk mitigation refers to strategies to minimize negative impacts, risk assessment encompasses the overall process of identifying and evaluating risks, and risk analysis involves a deeper examination of risks to understand their nature and context.