Risk Assessment is the process of identifying, analyzing, and determining the probability of occurrence of a risk and its impacts if it does occur.
It establishes a foundation for prioritizing risks and selecting appropriate response strategies by evaluating both the likelihood and potential consequences of each identified risk.
Key Characteristics
- Systematic Process – Follows structured steps of identification and analysis
- Probability and Impact Focused – Measures risk severity based on likelihood and consequences
- Feeds Risk Planning – Drives response selection and resource allocation
- Supports Ongoing Monitoring – Establishes baseline understanding for future reviews
Example Scenarios
- Analyzing potential cost overruns due to supply chain disruption
- Estimating the likelihood and impact of system downtime during deployment
- Categorizing risks using a probability and impact matrix
Role in Risk Management
- Drives Prioritization – Identifies which risks require immediate attention
- Improves Response Effectiveness – Ensures actions are tailored to actual exposure
- Enables Informed Decisions – Supports trade-offs between risk and opportunity
- Strengthens Risk Register Quality – Enhances accuracy and relevance of risk data
See also: Risk Analysis, Qualitative Risk Analysis, Quantitative Risk Analysis, Risk Register, Probability and Impact Matrix.