What are the best practices for prioritizing and categorizing incidents based on service delivery impact?

I would recommend editing "how much the incident affects the business objectives, the service levels, and the users" As "how much the incident affects the business objectives, regulatory compliance and controls, the service levels, and the users"

Each combination of impact and urgency results in a priority level. Priority can also be predefined for critical CI- customise workflow. If you are choosing critical CI, system should not allow p3/p4 unless it falls under help/enquiries or administration.

Best practices for prioritizing and categorizing incidents based on service delivery impact include defining clear impact criteria, such as affected services and user count, and implementing a priority matrix that visualizes urgency versus impact. Establish a standardized classification system (e.g., critical, high, medium, low) for consistent handling, and consider automating triage processes to streamline categorization. Regularly review and adjust prioritization criteria based on feedback and evolving business needs, while involving relevant stakeholders to ensure alignment with organizational priorities. Maintaining clear communication about prioritization decisions helps manage expectations and fosters transparency across teams.

As per ITIL V4, Typically, the routing is based on the incident category, which should help to identify the correct team. We must identify the support team and then focus on categories and add as and when needed. If we don’t identify the team, we may end up having huge list if categories which adds no value.

I agree with all of the points about impact to business priorities, service levels etc when determining priority and severity of an incident, but at no point in this article are customers referenced. For me, the greatest factor determining priority of management and resolution is the impact upon customers and customer processes. Customers perception of service, industry brand reputation and regulator opinion of a firm is almost always based on how an incident was handled from a customer perspective, not internal processes for prioritisation, complexity assessment or management. Customers and regulators understand things go wrong but they are not understanding of poor communication, lack of empathy or a perceived lack effort to resolve.