Is anyone out there using a 5 tier risk rating method?
High, Mod-High, Mod, Low-Mod, Low

I am looking at how to quantify and define these rating for our Risk Committee and was wondering if anyone would be willing to share how they define these and if they assign a specific dollar amount for potential loss to each rating.

Thank you.

We have been using a 6 tier risk rating, but will soon be expanding as many deals had qualities of two risk ratings and choosing one was sometimes more subjective rather than objective.

Ours were labeled
1 = Excellent
2 = Good
3 = Satisfactory
4 = Special Mention
5 = Substandard
6 = Doubtful

We use that rating for risk grading on our loans, however I am looking to apply a compliance risk for audits. I am struggling with how to quantify Reputational and operational risk in the form of a dollar amount that would effectively communicate to management the cost of not apply the appropriate controls and monitoring.

Sorry! Misunderstood!

Brandy F, you may get a better response and/or more responses, if you post this in the Audit forum.

We use a 5 tier risk rating system, ranges are Low, Moderate/Low, Moderate, Elevated, and High. Each tier includes quantitative (dollar amount) and qualitative scales (risk of legal action, level of regulatory scrutiny, potential for negative publicity, potential for business interruption, etc.).

I'm not sure the dollar ranges would be particularly helpful; I'd think that'd depend upon the size of the bank and other factors.

We use 9. Substandard starts at 5. Very granular as recommend by our examiner and FDIC friends.

JRN, yours may be a risk rating for loans. I believe the OP was looking at overall risks.