Risk assessment is a critical element of ISO 31000 risk management framework. Risk assessment provides the requisite evidence based data and information for Risk Based Thinking, specifically risk based problem solving and risk based decision making. Using the appropriate risk assessment for the organization can determine how to treat and manage specific risks.
The following are critical benefits for conducting a risk assessment specifically:
- Define critical business objectives.
- Understand the impacts of not being able to meet a specific objective.
- Understand the basic nature of risks and be able to select the appropriate risk assessment technique for Risk Based, Problem Solving and Risk Based, Decison Making.
- Assist in determining the choice of treatment
- Identify sources of risks, threats, and hazards.
- Identify interdependencies, dependencies, cascading effects, whitespace risks and events that may impact the organization.
- Identify upside and downside risks in various decision options.
- Compare and contrast varying risk assessment methods, approaches, systems, and processes.
- Prioritize mission critical objectives at different organizational levels.
- Focus on being proactive, preventive, predictive, and preemptive.
- Determine appropriate types of risk treatment and risk management. based on organizational context and stakeholder requirements.
- Satisfy statutory and regulatory requirements.
- Determine if risks should be accepted based upon organizational risk appetite.
ISO 31010 lists a number of risk assessment methods, that we will discuss in other articles.