What type of analysis evaluates the likelihood and impact of identified risks?

The concept of risk analysis involves a systematic process focused on evaluating and understanding the risks that an organization is exposed to. This type of analysis not only identifies various risks but also assesses their likelihood of occurrence and the potential impact they could have on the organization.

Through risk analysis, organizations can prioritize risks based on the severity and probability of their occurrence. This assessment can guide decision-makers in implementing controls, allocating resources effectively, and developing strategies to mitigate those high-priority risks.

This method is essential in developing a comprehensive risk management strategy, making informed business decisions, and ultimately protecting an organization’s assets, including its reputation, finances, and operational capabilities. By thoroughly executing risk analysis, an entity not only identifies what threats exist but also understands how critical they are, enabling proactive management of potential issues before they become significant problems.