Risk Identification Processes and Underlying Steps

All organizations face both physical and logical risks in their day-to-day operations. An organization should involve its stakeholders while conducting a risk assessment process. The three major steps in a risk assessment program will be discussed in this paper.

Risk Identification

Risk identification should be completed in the early phases of a project when a company’s risk vulnerability is the greatest. This gives an organization ample time to take action before it is too late to mitigate risk. The process focuses on determining the potential risks that can prevent the organization from executing its strategies to achieve both short-term and long-term objectives. The organization is required to create a comprehensive list of risks by collaboratively brainstorming with the right stakeholders to make better decisions. Also, it is necessary to solicit professional advice from external experts when necessary.

Risk Analysis

Risk analysis assesses the probability of adverse events happening within an organization. It is advisable to identify the possible problems and estimate the impacts they are likely to cause if they occur. Furthermore, estimating the probability that the identified threats will materialize is a key component of risk analysis. To achieve these, the firm needs to gather detailed information such as financial data, demand forecasts, security protocols, and relevant historical data. Risk analysis focuses on identifying the value of risks and establishing plans to mitigate the risks if they occur. Through risk analysis, companies may prefer to evade a particular risk completely or accept it and manage it accordingly.

Risk Evaluation

This process focuses on determining an organization’s risk management priorities by qualitatively and quantitatively establishing relationships between the identified risks and their impacts on key objectives. It is carried out through identifying a firm’s assets and prioritizing the identified assets according to their sensitivity. The last step is to identify and rate all the risks the firm is likely to face so as to create a comprehensive plan to execute if the risks materialize.

IT Risk Assessment Program

An IT risk assessment program should be a requirement for all organizations to avoid exploitation by hackers. It analyzes the threats and vulnerabilities an IT system is likely to face. This analysis is instrumental in implementing key security controls at a reasonable cost. Protecting confidential information is a must for any organization in order to maintain a good public image.

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