Risk assessment example

What is risk assessment?

A risk assessment is a systematic evaluation of potential risks for an activity, project, or business. Risks are identified and prioritized for action based on the probability of them occurring (likelihood) and the seriousness of the outcome if they do (impact). Risk assessment activities are sometimes referred to as risk analysis or risk mapping.

A risk assessment can be quantitative or qualitative. For quantitative analysis, explicit values are assigned to the probability of a risk occurring, and impact is often measured in financial terms. Qualitative risk assessments do not use numbers, and their main aim is to identify those risks that are perceived to pose the most danger.

Why do a risk assessment?

Risks assessments provide an opportunity to identify and understand hazards, vulnerabilities, and threats that could impact negatively on the business. Using this information, an organization can then prioritize expenditure and effort on risk mitigation and control strategies. Risk assessments are an opportunity for your whole team to participate in identifying key risks and obtain a mutual understanding of critical issues that might impact on your success.

Related templates
Tips for facilitating an effective risk assessment

Who should complete a risk assessment?

Because the technique is so simple and versatile, development of a Risk Map is useful for:

  • All industries
  • All levels of an organization
  • All departments
  • Existing or new businesses
  • Projects
  • Business processes

Use risk mapping:

  • As part of regular organizational reviews
  • To proactively assess changing business conditions
  • To explore new initiatives
  • To focus and redirect efforts and resources
  • As part of emergency, crisis and business continuity planning
  • As a broad environmental scan for initial planning

The risk assessment template

A qualitative risk assessment template (aka risk map) provides a visual representation of risks. The relative likelihood of a risk occurring appears on the X axis, while the Y-axis reflects the relative impact the risk would have if it eventuates.
High Impact
Low Impact

Difficult risks

These risks are unlikely to occur but would have a large impact if they did.

Critical risks

These risks have a medium to high likelihood of occurring, and would have a severe impact if they do.

Minor risks

These risks are unlikely to occur and would have minimal consequences if they did. With finite resources, these risks are not a priority.

Routine risks

These risk may occur frequently but have a low impact.
Low Likelihood
High Likelihood

How to run a risk assessment activity

The best process for evaluating risks to an organization will vary depending on the type of industry and the rules and regulations it is subject to. Organizations involved in high-risk industries (nuclear, aviation, medical, engineering) may have dedicated risk managers and departments whose sole role is to assess and plan controls for risks. For many businesses, however, a risk assessment can be carried out by a group of people with expert knowledge in the product, services, or process under assessment.

Scope

Give context and identify the scope of the risk assessment

Brainstorm

Gather input and ideas on the risks to the business

Position

Position risks according to their perceived likelihood and impact

Prioritize

Vote to identify which ones people think are the most urgent priorities for action

Mitigation Plan

Develop risk mitigation strategies and assign responsibilities and timeframes

Share

Report on the outcomes and monitor as part of your risk management strategy

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Save effort, time and money with GroupMap

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