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What Is Risk Assessment?

Understanding risk assessment, risk assessments for investments, risk assessments for lending, risk assessments for business.

  • Fundamental Analysis

Risk Assessment Definition, Methods, Qualitative Vs. Quantitative

risk assessment definition

Risk assessment is a general term used across many industries to determine the likelihood of loss on an asset, loan, or investment. Assessing risk is essential for determining how worthwhile a specific investment is and the best process(es) to mitigate risk. It presents the upside reward compared to the risk profile . Risk assessment is important in order to determine the rate of return an investor would need to earn to deem an investment worth the potential risk.

Key Takeaways

  • Risk assessment is the process of analyzing potential events that may result in the loss of an asset, loan, or investment.
  • Companies, governments, and investors conduct risk assessments before embarking on a new project, business, or investment.
  • Quantitative risk analysis uses mathematical models and simulations to assign numerical values to risk.
  • Qualitative risk analysis relies on a person's subjective judgment to build a theoretical model of risk for a given scenario.
  • While a stock's past volatility does not guarantee future returns, in general, an investment with high volatility indicates a riskier investment.

Risk assessment enables corporations, governments, and investors to assess the probability that an adverse event might negatively impact a business, economy, project, or investment. Risk analysis provides different approaches investors can use to assess the risk of a potential investment opportunity. Two types of risk analysis an investor can apply when evaluating an investment are quantitative analysis and qualitative analysis.

Quantitative Analysis

A quantitative analysis of risk focuses on building risk models and simulations that enable the user to assign numerical values to risk. An example of quantitative risk analysis would be a Monte Carlo simulation . This method—which can be used in a variety of fields such as finance, engineering, and science—runs a number of variables through a mathematical model to discover the different possible outcomes.

Qualitative Analysis

A qualitative analysis of risk is an analytical method that does not rely on numerical or mathematical analysis. Instead, it uses a person's subjective judgment and experience to build a theoretical model of risk for a given scenario. A qualitative analysis of a company might include an assessment of the company's management, the relationship it has with its vendors, and the public's perception of the company.

Investors frequently use qualitative and quantitative analysis in conjunction with one another to provide a clearer picture of a company's potential as an investment.

Other Risk Assessment Methods

Another example of a formal risk assessment technique includes conditional value at risk (CVaR) , which portfolio managers use to reduce the likelihood of incurring large losses. Mortgage lenders use loan-to-value ratios to evaluate the risk of lending funds. Lenders also use credit analysis to determine the creditworthiness of the borrower.

Both institutional and individual investments have expected amounts of risk. This is especially true of non-guaranteed investments, such as stocks, bonds, mutual funds , and exchange-traded funds (ETFs) . 

Standard deviation is a measure applied to the annual rate of return of an investment to measure the investment's volatility . In most cases, an investment with high volatility indicates a riskier investment. When deciding between several stocks, investors will often compare the standard deviation of each stock before making an investment decision.

However, it's important to note that a stock's past volatility (or lack thereof) does not predict future returns. Investments that previously experienced low volatility can experience sharp fluctuations, particularly during rapidly changing market conditions.

Lenders for personal loans, lines of credit , and mortgages also conduct risk assessments, known as credit checks. For example, it is common that lenders will not approve borrowers who have credit scores below 600 because lower scores are indicative of poor credit practices. A lender's credit analysis of a borrower may consider other factors, such as available assets, collateral , income, or cash on hand.

Business risks are vast and vary across industries. Such risks include new competitors entering the market; employee theft; data breaches; product recalls; operational, strategic and financial risks; and natural disaster risks.

Every business should have a risk management process in place to assess its current risk levels and enforce procedures to mitigate the worst possible risks. An effective risk management strategy seeks to find a balance between protecting the company from potential risks without hindering growth. Investors prefer to invest in companies that have a history of good risk management.

risk assessment definition

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risk assessment

assessment show sources hide sources CNSSI 4009-2015 , NIST SP 800-37 Rev. 2 Assessment show sources hide sources NIST SP 800-137 , NIST SP 800-30 Rev. 1 RA show sources hide sources NIST SP 800-12 Rev. 1 , NIST SP 800-55 Rev. 1 , NIST SP 800-66 Rev. 1 risk analysis show sources hide sources NIST SP 800-12 Rev. 1

   The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of an information system. Part of risk management, incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place. Synonymous with risk analysis. Sources: NIST SP 1800-21B under Risk Assessment NIST SP 800-137 under Risk Assessment from CNSSI 4009    Process to comprehend the nature of risk and to determine the level of risk. Sources: NIST SP 800-160 Vol. 2 Rev. 1 under risk analysis from ISO Guide 73 NIST SP 800-160v1r1 under risk analysis from ISO Guide 73    Overall process of risk identification, risk analysis, and risk evaluation. Sources: NIST SP 800-160 Vol. 2 Rev. 1 from ISO Guide 73 NIST SP 800-160v1r1 from ISO Guide 73    The process of identifying risks to agency operations (including mission, functions, image, or reputation), agency assets, or individuals by determining the probability of occurrence, the resulting impact, and additional security controls that would mitigate this impact. Part of risk management, synonymous with risk analysis, and incorporates threat and vulnerability analyses. Sources: NIST SP 800-18 Rev. 1 under Risk Assessment    The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of a system. Sources: NIST SP 800-172 from NIST SP 800-30 Rev. 1 NIST SP 800-172A from NIST SP 800-30 Rev. 1 NIST SP 800-37 Rev. 2 from NIST SP 800-30 Rev. 1 NIST SP 800-53 Rev. 5 from NIST SP 800-39 NIST SP 800-53A Rev. 5 from NIST SP 800-39 NIST SP 800-171 Rev. 2    The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of a system. Part of risk management, incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place. Synonymous with risk analysis. Sources: NIST SP 800-12 Rev. 1 under Risk Assessment from NIST SP 800-39    The process of identifying, estimating, and prioritizing risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of an information system. Part of risk management, incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place. Synonymous with risk analysis. Sources: CNSSI 4009-2015 from NIST SP 800-39 NIST SP 800-30 Rev. 1 under Risk Assessment from NIST SP 800-39 NIST IR 8323r1 from NIST SP 800-30 Rev. 1 NIST IR 8441 from NIST SP 800-30 Rev. 1    See Security Control Assessment. Sources: NIST SP 800-137 under Assessment NIST SP 800-172 under assessment NIST SP 800-39 under Assessment NIST SP 800-171 Rev. 2 under assessment    The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of an information system. Part of risk management, incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place.  Synonymous with risk analysis. Sources: NIST SP 800-39 under Risk Assessment    The process of identifying the risks to system security and determining the probability of occurrence, the resulting impact, and additional safeguards that would mitigate this impact. Part of Risk Management and synonymous with Risk Analysis. Sources: NIST SP 1800-10B under Risk Assessment NIST SP 1800-25B under Risk Assessment NIST SP 1800-26B under Risk Assessment    The process of identifying, estimating, and prioritizing risks to organizational operations (including mission, functions, image, or reputation), organizational assets, individuals, and other organizations, resulting from the operation of a system. It is part of risk management, incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place. Synonymous with risk analysis. Sources: NIST SP 800-63-3 under Risk Assessment    See control assessment or risk assessment. Sources: NIST SP 800-37 Rev. 2 under assessment NIST SP 800-53 Rev. 5 under assessment NIST SP 800-53A Rev. 5 under assessment    See security control assessment or risk assessment. Sources: CNSSI 4009-2015 under assessment from NIST SP 800-30 Rev. 1 NIST SP 800-30 Rev. 1 under Assessment    The process of identifying risks to agency operations (including mission, functions, image, or reputation), agency assets, or individuals by determining the probability of occurrence, the resulting impact, and additional security controls that would mitigate this impact. Part of risk management, synonymous with risk analysis. Incorporates threat and vulnerability analyses. Sources: NIST SP 800-82 Rev. 2 under Risk Assessment NISTIR 8183 under Risk Assessment NISTIR 8183 Rev. 1 under Risk Assessment from NIST SP 800-82 Rev. 2 NISTIR 8183A Vol. 1 under Risk Assessment NISTIR 8183A Vol. 2 under Risk Assessment NISTIR 8183A Vol. 3 under Risk Assessment    A completed or planned action of evaluation of an organization, a mission or business process, or one or more systems and their environments; or Sources: NIST SP 800-137A under assessment    The vehicle or template or worksheet that is used for each evaluation. Sources: NIST SP 800-137A under assessment    Risk management includes threat and vulnerability analyses as well as analyses of adverse effects on individuals arising from information processing and considers mitigations provided by security and privacy controls planned or in place. Synonymous with risk analysis. Sources: NIST SP 800-53 Rev. 5 from NISTIR 8062 - Adapted NIST SP 800-53A Rev. 5 from NISTIR 8062 - Adapted    The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of a system. Part of risk management, incorporates threat and vulnerability analyses and analyses of privacy problems arising from information processing and considers mitigations provided by security and privacy controls planned or in place. Synonymous with risk analysis. Sources: NIST SP 800-53B from NIST SP 800-39 NIST IR 8401 from NIST SP 800-30 Rev. 1    The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of an information system. Sources: NIST SP 1800-21C under Risk Assessment    The process of identifying, estimating, and prioritizing risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of an information system. Part of risk management incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place. Sources: NIST SP 1800-11B from NIST SP 800-30 Rev. 1 NIST SP 1800-30B from NIST SP 800-30 Rev. 1 NIST SP 1800-34B from NIST SP 800-30 Rev. 1    The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of an information system. A part of risk management incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place. Sources: NIST SP 800-160 Vol. 2 Rev. 1 from NIST SP 800-39 - adapted    The process of identifying, estimating, and prioritizing risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of an information system. Part of risk management, incorporates threat and vulnerability analyses, and considers mitigations provided by security controls planned or in place. Synonymous with risk analysis. Sources: NIST SP 800-188 from NIST SP 800-39    The process of identifying risks to agency operations (including mission, functions, image, or reputation), agency assets, or individuals by determining the probability of occurrence, the resulting impact, and additional security controls that would mitigate this impact. Part of risk management, synonymous with risk analysis. Incorporates threat and vulnerability analyses. Sources: NISTIR 8183 under Risk Assessment from NIST SP 800-82 Rev. 2

Glossary Comments

Comments about specific definitions should be sent to the authors of the linked Source publication. For NIST publications, an email is usually found within the document.

Comments about the glossary's presentation and functionality should be sent to [email protected] .

See NISTIR 7298 Rev. 3 for additional details.

Risk Assessment

Risk assessment definition.

A Risk Assessment is a systematic process used to identify, evaluate, and prioritize potential risks that could negatively impact an organization’s objectives, operations, or specific projects. This process helps organizations manage and mitigate these risks before they escalate into critical issues.

What is Risk Assessment?

Risk Assessment is the structured examination of uncertain situations wherein potential threats and their potential consequences are identified. This is done to determine appropriate interventions to eliminate or control these risks and prioritize them based on their likelihood and potential impact.

A risk assessment’s ultimate objective is to ensure individuals’ safety and maintain the operational functionality and reputation of organizations. It delves into the psychology of uncertainty. Assessors don’t just identify threats; they step into the shoes of stakeholders, anticipating anxieties, understanding biases, and gauging emotional impacts. According to Daniel Kahneman’s “Thinking, Fast and Slow” , human beings often exhibit biases in risk evaluation. Integrating cognitive psychology into risk assessment helps organizations better predict human responses to potential threats.

Also, Risk Assessment is a strategic tool that evolves with the times, adapting to new technologies and unpredictable market shifts (distinguish from Risk Register ). For instance, the rise of digital transformation has ushered in cyber threats that traditional risk assessment methods couldn’t have foreseen. As per the World Economic Forum’s Global Risks Report , cyberattacks and data breaches have consistently ranked among the top global risks. This demonstrates the ever-evolving nature of threats and underscores the need for assessments to adapt and be forward-thinking.

Risk Assessment Matrix

A Risk Assessment Matrix, also known as a Probability and Severity matrix, is a visual tool used to evaluate and prioritize risks based on the likelihood of their occurrence and the potential impact or severity of their consequences. The matrix helps organizations to identify which risks need immediate attention and which ones can be monitored or accepted.

Here’s how it generally works:

  • Minor (Insignificant impact)
  • Low (Limited impact)
  • Medium (Moderate impact)
  • High (Major/Severe impact)
  • Extreme (Catastrophic impact)

When you plot risks on this matrix, you can categorize them based on their position:

  • High Likelihood and High Impact : These are critical risks that require immediate attention and action.
  • High Likelihood and Low Impact : These risks might happen frequently, but they don’t have a significant consequence. They still need attention, but perhaps not as urgently as the above category.
  • Low Likelihood and High Impact : These risks don’t occur frequently, but if they do, they can cause significant harm. Contingency plans are often developed for these types of risks.
  • Low Likelihood and Low Impact : These risks can generally be accepted or monitored, as they don’t happen often and don’t have a major impact.

By visually displaying risks in this manner, the Risk Assessment Matrix allows organizations to make informed decisions on where to allocate resources and how to best manage or mitigate identified risks. The matrix serves as a foundational tool in risk management processes across various industries, from project management to health and safety to cybersecurity.

The risk assessment matrix, while a cornerstone today, it has its critics. Some experts, as highlighted in Risk Analysis Journal , argue that its over-simplification can sometimes miss nuances. Balancing traditional matrices with modern analytical tools like AI-powered risk prediction can offer a more holistic assessment.

What are the Five Principles of Risk Assessment?

  • Identify Hazards : This is the initial step where potential threats or hazards, both obvious and non-obvious, are identified.
  • Risk Estimation: Decide who might be harmed and how. This entails determining which individuals or groups are at risk and understanding the potential harm they could face.
  • Risk Evaluation: Evaluate the risks and decide on precautions. Here, the identified risks are ranked, and suitable measures to mitigate or eliminate them are proposed.
  • Risk Control: Record your findings and implement measures to mitigate the identified risks. Any professional risk assessment should be documented. This serves as a record and can also serve as a guide for implementing control measures.
  • Monitoring and Review: Continuously checking and updating the assessment. Risks change over time, making it crucial to review and update the assessment periodically.

While the five principles of Risk Assessment remain foundational, there’s an emerging sixth principle — ‘ Adaptive Forecasting .’ With the rise of real-time data analytics, organizations are now continually updating risk assessments, not just as a periodic exercise. A study from Harvard Business Review indicates that adaptive risk management can lead to quicker response times in fast-paced industries like finance and technology.

Risk Assessment Examples

  • Business Operations : A company might assess risks associated with a new market entry, considering factors like political instability, currency fluctuations, or potential supply chain disruptions.
  • IT and Cybersecurity : Businesses may perform risk assessments on their IT infrastructure to identify vulnerabilities that could be exploited by hackers or malware.
  • Health and Safety : In industries like construction or manufacturing, risk assessments are conducted to identify potential hazards like machinery malfunctions or exposure to harmful substances.
  • Environmental : Companies may evaluate risks related to environmental factors, such as potential spills or emissions that could harm the environment.

Risk Assessment Template

A risk assessment template is a standardized document or software used to simplify the risk assessment process. By following a template, organizations can ensure they are thorough in their assessment, covering all potential risks and following best practices.

Risk assessment is a pivotal component in any organization’s strategic and operational planning. It’s a proactive approach to identifying, understanding, and mitigating potential threats, ensuring safety, and fostering resilience. Risk assessment is fundamental to informed decision-making, whether it’s a business considering expansion or an industry navigating operational hazards.

Related Terms

  • SMART Goal Setting
  • Moscow Prioritization
  • Stakeholders Analysis
  • Product Design
  • Minimum Viable Product (MVP)
  • Customer Acquisition Cost (CAC)

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risk assessment definition

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Meaning of risk assessment in English

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  • adjudication
  • analytically
  • interpretable
  • interpretive
  • interpretively
  • investigate
  • reinterpretation
  • reinvestigate
  • reinvestigation
  • run over/through something

risk assessment | Business English

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Canadian Centre for Occupational Health and Safety

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Hazard and Risk - Risk Assessment

On this page, what is a risk assessment, why is risk assessment important, what is the goal of risk assessment, when should a risk assessment be done, how do you plan for a risk assessment, how is a risk assessment done, how are the hazards identified, how do you know if the hazard will cause harm (poses a risk), how are risks ranked or prioritized, what are methods of hazard control, why is it important to review and monitor the assessments, what documentation should be done for a risk assessment.

Risk assessment is a term used to describe the overall process or method where you:

  • Identify hazards and risk factors that have the potential to cause harm (hazard identification).
  • Analyze and evaluate the risk associated with that hazard (risk analysis, and risk evaluation).
  • Determine appropriate ways to eliminate the hazard, or control the risk when the hazard cannot be eliminated (risk control).

A risk assessment is a thorough look at your workplace to identify those things, situations, processes, etc. that may cause harm, particularly to people. After identification is made, you analyze and evaluate how likely and severe the risk is. When this determination is made, you can next, decide what measures should be in place to effectively eliminate or control the harm from happening.

The CSA Standard Z1002 "Occupational health and safety - Hazard identification and elimination and risk assessment and control" uses the following terms:

Risk assessment – the overall process of hazard identification, risk analysis, and risk evaluation. Hazard identification – the process of finding, listing, and characterizing hazards. Risk analysis – a process for comprehending the nature of hazards and determining the level of risk. Notes: (1) Risk analysis provides a basis for risk evaluation and decisions about risk control. (2) Information can include current and historical data, theoretical analysis, informed opinions, and the concerns of stakeholders. (3) Risk analysis includes risk estimation. Risk evaluation – the process of comparing an estimated risk against given risk criteria to determine the significance of the risk. Risk control – actions implementing risk evaluation decisions. Note: Risk control can involve monitoring, re-evaluation, and compliance with decisions.

For definitions and more information about what hazards and risks are, please see the OSH Answers document Hazard and Risk .

Risk assessments are very important as they form an integral part of an occupational health and safety management plan. They help to:

  • Create awareness of hazards and risk.
  • Identify who may be at risk (e.g., employees, cleaners, visitors, contractors, the public, etc.).
  • Determine whether a control program is required for a particular hazard.
  • Determine if existing control measures are adequate or if more should be done.
  • Prevent injuries or illnesses, especially when done at the design or planning stage.
  • Prioritize hazards and control measures.
  • Meet legal requirements where applicable.

The aim of the risk assessment process is to evaluate hazards, then remove that hazard or minimize the level of its risk by adding control measures, as necessary. By doing so, you have created a safer and healthier workplace.

The goal is to try to answer the following questions:

  • What can happen and under what circumstances?
  • What are the possible consequences?
  • How likely are the possible consequences to occur?
  • Is the risk controlled effectively, or is further action required?

There may be many reasons a risk assessment is needed, including:

  • Before new processes or activities are introduced.
  • Before changes are introduced to existing processes or activities, including when products, machinery, tools, equipment change or new information concerning harm becomes available.
  • When hazards are identified.

In general, determine:

  • What the scope of your risk assessment will be (e.g., be specific about what you are assessing such as the lifetime of the product, the physical area where the work activity takes place, or the types of hazards).
  • The resources needed (e.g., train a team of individuals to carry out the assessment, the types of information sources, etc.).
  • What type of risk analysis measures will be used (e.g., how exact the scale or parameters need to be in order to provide the most relevant evaluation).
  • Who are the stakeholders involved (e.g., manager, supervisors, workers, worker representatives, suppliers, etc.).
  • What relevant laws, regulations, codes, or standards may apply in your jurisdiction, as well as organizational policies and procedures.

Assessments should be done by a competent person or team of individuals who have a good working knowledge of the situation being studied. Include either on the team or as sources of information, the supervisors and workers who work with the process under review as these individuals are the most familiar with the operation.

In general, to do an assessment, you should:

  • Identify hazards.
  • Consider normal operational situations as well as non-standard events such as maintenance, shutdowns, power outages, emergencies, extreme weather, etc.
  • Review all available health and safety information about the hazard such as Safety Data Sheet (SDS), manufacturers literature, information from reputable organizations, results of testing, workplace inspection reports, records of workplace incidents (accidents), including information about the type and frequency of the occurrence, illnesses, injuries, near misses, etc.
  • Understand the minimum legislated requirements for your jurisdiction.
  • Identify actions necessary to eliminate the hazard, or control the risk using the hierarchy of risk control methods.
  • Evaluate to confirm if the hazard has been eliminated or if the risk is appropriately controlled.
  • Monitor to make sure the control continues to be effective.
  • Keep any documents or records that may be necessary. Documentation may include detailing the process used to assess the risk, outlining any evaluations, or detailing how conclusions were made.

When doing an assessment, also take into account:

  • The methods and procedures used in the processing, use, handling or storage of the substance, etc.
  • The actual and the potential exposure of workers (e.g., how many workers may be exposed, what that exposure is/will be, and how often they will be exposed).
  • The measures and procedures necessary to control such exposure by means of engineering controls, work practices, and hygiene practices and facilities.
  • The duration and frequency of the task (how long and how often a task is done).
  • The location where the task is done.
  • The machinery, tools, materials, etc. that are used in the operation and how they are used (e.g., the physical state of a chemical, or lifting heavy loads for a distance).
  • Any possible interactions with other activities in the area and if the task could affect others (e.g., cleaners, visitors, etc.).
  • The lifecycle of the product, process or service (e.g., design, construction, uses, decommissioning).
  • The education and training the workers have received.
  • How a person would react in a particular situation (e.g., what would be the most common reaction by a person if the machine failed or malfunctioned).

It is important to remember that the assessment must take into account not only the current state of the workplace but any potential situations as well.

By determining the level of risk associated with the hazard, the employer, and the health and safety committee (where appropriate), can decide whether a control program is required and to what level.

See a sample risk assessment form .

Overall, the goal is to find and record possible hazards that may be present in your workplace. It may help to work as a team and include both people familiar with the work area, as well as people who are not - this way you have both the experienced and fresh eye to conduct the inspection. In either case, the person or team should be competent to carry out the assessment and have good knowledge about the hazard being assessed, any situations that might likely occur, and protective measures appropriate to that hazard or risk.

To be sure that all hazards are found:

  • Look at all aspects of the work.
  • Include non-routine activities such as maintenance, repair, or cleaning.
  • Look at accident / incident / near-miss records.
  • Include people who work off site either at home, on other job sites, drivers, teleworkers, with clients, etc.
  • Look at the way the work is organized or done (include experience of people doing the work, systems being used, etc).
  • Look at foreseeable unusual conditions (for example: possible impact on hazard control procedures that may be unavailable in an emergency situation, power outage, etc.).
  • Determine whether a product, machine or equipment can be intentionally or unintentionally changed (e.g., a safety guard that could be removed).
  • Review all of the phases of the lifecycle.
  • Examine risks to visitors or the public.
  • Consider the groups of people that may have a different level of risk such as young or inexperienced workers, persons with disabilities, or new or expectant mothers.

It may help to create a chart or table such as the following:

Each hazard should be studied to determine its' level of risk. To research the hazard, you can look at:

  • Product information / manufacturer documentation.
  • Past experience (knowledge from workers, etc.).
  • Legislated requirements and/or applicable standards.
  • Industry codes of practice / best practices.
  • Health and safety material about the hazard such as safety data sheets (SDSs), research studies, or other manufacturer information.
  • Information from reputable organizations.
  • Results of testing (atmospheric or air sampling of workplace, biological swabs, etc.).
  • The expertise of an occupational health and safety professional.
  • Information about previous injuries, illnesses, near misses, incident reports, etc.
  • Observation of the process or task.

Remember to include factors that contribute to the level of risk such as:

  • The work environment (layout, condition, etc.).
  • The systems of work being used.
  • The range of foreseeable conditions.
  • The way the source may cause harm (e.g., inhalation, ingestion, etc.).
  • How often and how much a person will be exposed.
  • The interaction, capability, skill, experience of workers who do the work.

Ranking or prioritizing hazards is one way to help determine which risk is the most serious and thus which to control first. Priority is usually established by taking into account the employee exposure and the potential for incident, injury or illness. By assigning a priority to the risks, you are creating a ranking or an action list.

There is no one simple or single way to determine the level of risk. Nor will a single technique apply in all situations. The organization has to determine which technique will work best for each situation. Ranking hazards requires the knowledge of the workplace activities, urgency of situations, and most importantly, objective judgement.

For simple or less complex situations, an assessment can literally be a discussion or brainstorming session based on knowledge and experience. In some cases, checklists or a probability matrix can be helpful. For more complex situations, a team of knowledgeable personnel who are familiar with the work is usually necessary.

As an example, consider this simple risk matrix. Table 1 shows the relationship between probability and severity.

Risk Matrix

Severity ratings in this example represent:

  • High: major fracture, poisoning, significant loss of blood, serious head injury, or fatal disease
  • Medium: sprain, strain, localized burn, dermatitis, asthma, injury requiring days off work
  • Low: an injury that requires first aid only; short-term pain, irritation, or dizziness

Probability ratings in this example represent:

  • High: likely to be experienced once or twice a year by an individual
  • Medium: may be experienced once every five years by an individual
  • Low: may occur once during a working lifetime

The cells in Table 1 correspond to a risk level, as shown in Table 2.

Risk Ratings

These risk ratings correspond to recommended actions such as:

  • Immediately dangerous: stop the process and implement controls
  • High risk: investigate the process and implement controls immediately
  • Medium risk: keep the process going; however, a control plan must be developed and should be implemented as soon as possible
  • Low risk: keep the process going, but monitor regularly. A control plan should also be investigated
  • Very low risk: keep monitoring the process

Let's use an example: When painting a room, a step stool must be used to reach higher areas. The individual will not be standing higher than 1 metre (3 feet) at any time. The assessment team reviewed the situation and agrees that working from a step stool at 1 m is likely to:

  • Cause a short-term injury such as a strain or sprain if the individual falls. A severe sprain may require days off work. This outcome is similar to a medium severity rating.
  • Occur once in a working lifetime as painting is an uncommon activity for this organization. This criterion is similar to a low probability rating.

When compared to the risk matrix chart (Table 1), these values correspond to a low risk.

Risk Matrix / Ratings

The workplace decides to implement risk control measures, including the use of a stool with a large top that will allow the individual to maintain stability when standing on the stool. They also determined that while the floor surface is flat, they provided training to the individual on the importance of making sure the stool's legs always rest on the flat surface. The training also included steps to avoid excess reaching while painting.

Once you have established the priorities, the organization can decide on ways to control each specific hazard. Hazard control methods are often grouped into the following categories:

  • Elimination (including substitution).
  • Engineering controls.
  • Administrative controls.
  • Personal protective equipment.

For more details, please see the OSH Answers Hazard Control .

It is important to know if your risk assessment was complete and accurate. It is also essential to be sure that any changes in the workplace have not introduced new hazards or changed hazards that were once ranked as lower priority to a higher priority.

It is good practice to review your assessment on a regular basis to make sure your control methods are effective.

Keeping records of your assessment and any control actions taken is very important. You may be required to store assessments for a specific number of years. Check for local requirements in your jurisdiction.

The level of documentation or record keeping will depend on:

  • Level of risk involved.
  • Legislated requirements.
  • Requirements of any management systems that may be in place.

Your records should show that you:

  • Conducted a good hazard review.
  • Determined the risks of those hazards.
  • Implemented control measures suitable for the risk.
  • Reviewed and monitored all hazards in the workplace.
  • Fact sheet last revised: 2017-02-15

National Academies Press: OpenBook

Scientific Review of the Proposed Risk Assessment Bulletin from the Office of Management and Budget (2007)

Chapter: 3 risk assessment definition and goals, 3 risk assessment definition and goals.

This chapter addresses the definition of risk assessment proposed by the Office of Management and Budget (OMB). The definition is important because it determines which agency analyses are subject to the standards set forth in the bulletin. As discussed here, the committee finds that some departures from long-standing concepts could create confusion and controversy. The chapter also reviews the goals set forth in the bulletin. The goals are generally constructive but raise questions about the emphasis on efficiency rather than scientific quality.

The committee notes that the bulletin does not define risk , which lies at the core of “risk assessment.” Risk can be defined as a hazard, a probability, a consequence, or a combination of probability and severity of consequences. Although the bulletin hints at taking both probability and severity into account, it appears to treat risk primarily as the probability of adverse effect, which is an incomplete conceptualization of risk.

DEFINITION OF RISK ASSESSMENT

Section I of the bulletin defines risk assessment as “a scientific and/or technical document that assembles and synthesizes scientific information to determine whether a potential hazard exists and/or the extent of possible risk to human health, safety or the environment” (OMB 2006a, p. 23). The supplementary information explains that “for the purposes of this Bulletin, this definition applies to documents that could be used for risk assessment purposes, such as an exposure or hazard assess-

ment that might not constitute a complete risk assessment as defined by the National Research Council [NRC 1983]. This definition includes documents that evaluate baseline risk as well as risk mitigation activities” (OMB 2006a, p. 8).

It is important to note that the bulletin’s definition of risk assessment is closely tied to which documents need to comply with the standards of the bulletin. That is, the applicability of the bulletin is intrinsically related to the definition of risk assessment because anything defined as a risk assessment will need to comply with the standards as indicated in Section II of the bulletin (“Applicability”), which states that “to the extent appropriate, all agency risk assessments available to the public shall comply with the standards of this Bulletin” (OMB 2006a, p. 23).

A recurring theme in comments received by OMB on the bulletin from organizations, associations, and individuals concerned the definition of risk assessment. Of the 78 public comments submitted to OMB (OMB 2006b), 50 (64%) discussed the definition of risk assessment. Most of those comments mentioned that the proposed definition is too broad and may create confusion and other problems. Several agencies responding to the committee’s questions also pointed to potential confusion and the need for further clarification. 1

The definition of risk assessment in the bulletin is extremely broad. Specifically, OMB defines risk assessment as a document. That characterization conflicts with standard risk assessment definitions. Risk assessment is a process from which documents can result. To define risk assessment as a document is problematic. It can capture many “documents” that are not risk assessment. More important, OMB defines risk assessment in such a way that its individual components, such as hazard assessment and exposure assessment, are inappropriately classified as “risk assessment.” Expanding the definition of risk assessment in such a way has a number of disadvantages:

Hazard and exposure assessments are components of a risk assessment but do not in themselves constitute a risk assessment. A hazard assessment—which describes and assesses the nature of a hazard—and an exposure assessment—which estimates the expected intensity, frequency, and duration of an exposure—clearly are different from a risk

assessment, which incorporates these components with hazard characterization or dose-response assessment to determine the likelihood and severity of an adverse effect or event given specified conditions. Equating risk assessment with components of risk assessment creates confusion by referring to different types of analyses with the same name. In addition, including hazard and exposure assessments would require application of the requirements of the bulletin to an extremely large number of documents, adding substantial time and resource burdens to the agencies (see “Costs” in Chapter 6 for further discussion of this issue). The committee emphasizes that although the technical requirements indicated in the proposed bulletin should not necessarily be applied to each component, the goals of higher quality and transparency should be met by all components of risk assessment.

Previous NRC documents and other relevant documents (NRC 1983, 1989, 1993, 1994, 1996) use definitions of risk assessment that clearly differentiate risk assessment from its components. Similarly, the glossary of the 1997 Presidential/Congressional Commission on Risk Assessment and Risk Management (PCCRARM 1997) and the glossary of the Society for Risk Analysis (SRA 2003) include definitions of risk assessment that differentiate risk assessment from its components or “steps.”

Uniform general guidelines may not be able to be issued for exposure assessment. Authors of the 1983 NRC report Risk Assessment in the Federal Government: Managing the Process concluded that “exposure guidelines, in contrast with guidelines for other risk assessment steps, are not now readily amenable to uniform application in various agencies,” and “the agencies have rather narrowly defined interests regarding exposure” (NRC 1983, p. 81).

Several requirements of Sections IV and V of the bulletin are aimed at risk assessments and cannot be applied to exposure or hazard assessment or other components of risk assessment (for example, evaluation of risk reduction alternatives). Because it is not clear how those standards of the bulletin could be applied to hazard or exposure assessments, it also is not clear how the agencies could issue certificates of compliance for those documents.

Some of the documents listed as examples of influential risk assessments in the supplementary information collect and summarize information from a variety of sources and studies and provide it in a format that is useful to both health professionals and the public. Many of the documents contain hazard identification, dose-response assessments, or

both but do not include exposure assessments or risk characterizations. Subjecting those documents to the requirements for risk assessment detailed in the bulletin could greatly delay release of important health information to the public.

It is unclear whether the broad definition pertains to many safety guidelines that are now issued without going through a detailed risk assessment process. That could lead to delays in putting out important guidelines, warnings, and alerts. Examples include guidelines for healthcare workers on the handling of hazardous biologic materials, such as body fluids from HIV patients; guidelines for respirator fit testing; National Institutes of Health guidelines for research practices, particularly in relation to new therapies and technologies (for example, those on the use of recombinant-DNA products); and health information alerts or warnings, which may result from reports of adverse effects of a therapy or medication. At the public meeting for this committee, the Food and Drug Administration (FDA) representative warned that OMB’s definition would include most FDA safety alerts and that the risk assessment standards could delay the issuance of safety alerts regarding the adverse effects of drugs, medical devices, or foods.

It also is not clear whether epidemiologic or toxicologic research used in risk assessments to identify factors that affect human health would now be classified as risk assessment and thus be subject to the standards in the bulletin.

OMB appears to redefine risk assessment to include some aspects of risk mitigation, such as analysis of risk reduction measures to inform risk management decision-making. The bulletin and the supplementary information approach this point in different ways, creating the potential for inconsistent interpretation and implementation of the standards. Specifically, the bulletin refers to risk mitigation only in relation to regulatory analyses (see Section IV[7]), where this reference is appropriate, and not in the definition of risk assessment (see Section I), where such a reference would be a sharp departure from the long-established conceptual distinction between risk assessment and risk management. However, the supplementary information specifies that the definition of risk assessment “includes documents that evaluate baseline risk as well as risk mitigation activities” (OMB 2006a, p. 8)—an auxiliary definition that highlights the departure from the conceptual distinction. If the definition from the supplementary information is incorporated into the risk assessment definition, the bulletin would conflict with the 1983 NRC recom-

mendation, reinforced in numerous reports, to “take steps to establish and maintain a clear conceptual distinction between assessment of risk and consideration of risk management alternatives” (NRC 1983, p. 7). In making that recommendation, the 1983 NRC committee noted that experience shows that difficulties can arise from not having a clear distinction between those closely related, but different, aspects of setting regulatory standards. For example, if nonrisk factors, such as the expected economic or political consequences of proposed regulatory action, were seen to affect either the interpretation of scientific information or the choice of default options, the credibility of the assessment inside and outside an agency could be compromised, and this might reduce the legitimacy of the risk management decision itself.

Since the publication of the 1983 NRC report, there has been some debate as to how much one can separate risk management from risk assessment. Nevertheless, the 1994 NRC report Science and Judgment in Risk Assessment stated that “protecting the integrity of the risk assessment, while building more productive linkages to make risk assessment more accurate and relevant to risk management, will be essential as the agency [EPA] proceeds to regulate the residual risks of hazardous air pollutants” (NRC 1994, p. 260). Furthermore, the 1996 NRC report Understanding Risk stated that “what is needed for successful characterization of risk must be considered at the very beginning of the process and must to a great extent drive risk analysis. If a risk characterization is to fulfill its purpose, it must (1) be decision driven, (2) recognize all significant concerns, (3) reflect both analysis and deliberation, with appropriate input from the interested and affected parties, and (4) be appropriate to the decision” (NRC 1996, p. 16). Thus, the committee believes that risk assessors and risk managers should talk with each other; that is, a “conceptual distinction” does not mean establishing a wall between risk assessors and risk managers. Indeed, they should have constant interaction. However, the dialogue should not bias or otherwise color the risk assessment conducted, and the activities should remain distinct; that is, risk assessors should not be performing risk management activities.

The bulletin and the supplementary information lay out five goals, also called “aspirational goals” (see Table 3-1 ). The goals can be seen as having to do with both the efficiency and the quality of a risk assessment.

TABLE 3-1 Goals for Risk Assessment as Stated in Bulletin and Clarified in Supplementary Information

All federal-agency risk assessments are subject to OMB’s Information Quality Guidelines (67 Fed. Reg. 8452 [2002]), which require utility, objectivity, and integrity. As a first approximation, goals 1, 3, and 5 focus on quality, and goals 2 and 4 on efficiency. Objectivity and integrity are addressed by the five goals to the extent that peer review and public participation contribute to these attributes.

Goal related to problem formulation (1). This is principally the goal of good communication between the risk assessor and the agency decision-maker or client. Although the emphasis is on an iterative discussion in the bulletin, the supplementary information adds a cost-effectiveness component.

Goal related to completeness (2) . This is principally the goal of balancing the completeness of a risk assessment in providing relevant information to the agency decision-maker with the decision-maker’s immediate needs. The goal calls for a cost-benefit balancing of scientific completeness with practical usefulness in making decisions in keeping with OMB’s Information Quality Guidelines (67 Fed. Reg. 8452 [2002]). Having the scope and content linked to the assessment seems logical, and one would hope that this recommendation is already implicit in most risk assessments. The supplementary information raises a number issues about satisfying the goal. For example, the supplementary information refers to a well-defined scope as one that “limits the inquiry to a set of practical, tractable and relevant questions” (OMB 2006a, p. 10). However, how should the properties of practical, tractable, and relevant be established? In addition, the supplementary information indicates that “the scope of an assessment should reflect a balance between the desire for scientific completeness and the need to provide relevant information to decision makers” (OMB 2006a, p. 10). One might expect that decision-makers would want nothing less than scientifically relevant information. What constitutes scientifically complete information might be a contentious issue. A risk assessment might be conducted on a new class of hazards or a new engineered system before extensive data are available. Then, the question would be, How does the magnitude of the uncertainty affect the policy decision?

Goal related to effort expended (3). In what may be only an oversight, this goal differs somewhat between the bulletin and the supplementary information. The goal according to the bulletin addresses the type of risk assessment performed, whereas the goal according to the supplementary information addresses effort and resources. These are not

contradictory, but different. The former seems to be what was intended. But the meaning of “the type of risk assessment prepared” is not self-evident and is not clarified in the bulletin or the supplementary information.

Goals related to resources expended (4). This goal is a corollary of the aforementioned goal related to completeness. This goal says that the time and money invested in the risk assessment should be commensurate with the use to which the results are to be put, that is, the “importance of the risk assessment.” That is redundant in light of goal 3 in the supplementary information; goal 3 might be better represented by its description in the bulletin than by that in the supplementary information.

Goal related to peer review and public participation (5) . This goal involves principally adequate review of the product of the risk assessment. Although the bulletin suggests peer review and public participation in the “process of preparing the risk assessment,” the supplementary information emphasizes the product.

Taken as a whole, the five goals say, in essence, that a risk assessment should be tailored to the narrow need for which it is undertaken; balanced in scope, time, and cost with the importance of the issue; and peer-reviewed and subject to public participation. To the extent that current practice is inadequate in coordinating the focus and scope of a risk assessment with the objectives of the agency decision-maker, and to the extent that the outcomes of a risk assessment are inadequately reviewed and not subject to public comment, goals 1 and 5 are beneficial in promoting higher-quality risk assessments. Whether those conditions exist is a separate question.

A risk assessment usually involves incomplete data, scientific uncertainty, and the need for expert judgment. The pressure to narrow the scope becomes a pressure to give inadequate attention to those complications. Thus, the goals may lead to less expensive and quicker risk assessments, but they do not necessarily lead to higher-quality risk assessments.

The dominating theme of the bulletin and the supplementary information is improving the quality of risk assessments undertaken by federal agencies, but the stated goals do not all support this theme. The goals stated in the bulletin and the supplementary information emphasize efficiency in the conduct of risk assessment activities more than quality .

NRC (National Research Council). 1983. Risk Assessment in the Federal Government: Managing the Process. Washington DC: National Academy Press.

NRC (National Research Council). 1989. Improving Risk Communication. Washington DC: National Academy Press.

NRC (National Research Council). 1993. Issues in Risk Assessment, Volumes I, II and III. Washington DC: National Academy Press.

NRC (National Research Council). 1994. Science and Judgment in Risk Assessment. Washington DC: National Academy Press.

NRC (National Research Council). 1996. Understanding Risk: Informing Decisions in a Democratic Society. Washington DC: National Academy Press.

OMB (U.S. Office of Management and Budget). 2006a. Proposed Risk Assessment Bulletin. Released January 9, 2006. Washington, DC: Office of Management and Budget, Executive Office of the President [online]. Available: http://www.whitehouse.gov/omb/ inforeg/proposed_risk_assessment_bulletin_010906.pdf [accessed Oct. 11, 2006].

OMB (Office of Management and Budget). 2006b. Comments on Proposed Risk Assessment Bulletin. Office of Management and Budget, Washington, DC [online]. Available: http://www.whitehouse.gov/omb/inforeg/comments_rab/list_rab2006.html [accessed Oct. 13, 2006].

PCCRARM (Presidential/Congressional Commission on Risk Assessment and Risk Management). 1997. Glossary. Pp. 153-157 in Risk Assessment and Risk Management in Regulatory Decision-Making, Vol. 2. Washington, DC: U.S. Government Printing Office [online]. Available: http://www.riskworld.com/Nreports/1997/risk-rpt/volume2/pdf/v2epa.PDF [accessed Oct. 3, 2006].

SRA (Society for Risk Analysis). 2003. Risk Analysis Glossary [online]. Available: http://www.sra.org/resources_glossary_p-r.php [accessed Oct. 13, 2006].

Risk assessments are often used by the federal government to estimate the risk the public may face from such things as exposure to a chemical or the potential failure of an engineered structure, and they underlie many regulatory decisions. Last January, the White House Office of Management and Budget (OMB) issued a draft bulletin for all federal agencies, which included a new definition of risk assessment and proposed standards aimed at improving federal risk assessments. This National Research Council report, written at the request of OMB, evaluates the draft bulletin and supports its overall goals of improving the quality of risk assessments. However, the report concludes that the draft bulletin is "fundamentally flawed" from a scientific and technical standpoint and should be withdrawn. Problems include an overly broad definition of risk assessment in conflict with long-established concepts and practices, and an overly narrow definition of adverse health effects—one that considers only clinically apparent effects to be adverse, ignoring other biological changes that could lead to health effects. The report also criticizes the draft bulletin for focusing mainly on human health risk assessments while neglecting assessments of technology and engineered structures.

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risk assessment definition

Risk Assessment

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A risk assessment is a process used to identify potential hazards and analyze what could happen if a disaster or hazard occurs. There are numerous hazards to consider, and each hazard could have many possible scenarios happening within or because of it.

Use the Risk Assessment Tool to complete your risk assessment. This tool will allow you to determine which hazards and risks are most likely to cause significant injuries and harm.

As you conduct the risk assessment, look for vulnerabilities or weaknesses that could make your business more susceptible to damage from a hazard. Vulnerabilities include deficiencies in building construction, process systems, security, protection systems and loss prevention programs. They contribute to the severity of damage when an incident occurs. For example, a building without a fire sprinkler system could burn to the ground while a building with a properly designed, installed and maintained fire sprinkler system would suffer limited fire damage.

The impacts from hazards can be reduced by investing in mitigation . If there is a potential for significant impacts, then creating a mitigation strategy should be a high priority.

Risk Assessment Resources

  • Multi-hazard Mapping Information Platform - Federal Emergency Management Agency (FEMA)
  • Flood Map Service Center - FEMA
  • Earthquake Hazards information - United States Geological Survey (USGS)
  • Hurricane - FEMA
  • Landslide Hazards Program - USGS
  • Volcano Hazards Program - USGS
  • Protecting Workers from Heat Illness - Occupational Safety and Health Administration (OSHA)

Human-Caused Hazards

  • Survey Your Workplace for Additional Hazards - OSHA Compliance Assistance Quick Start for General Industry
  • Workplace Violence—Issues in Response - Federal Bureau of Investigation

Technological Hazards

  • Risk Assessment Portal , guidance and guidelines - U.S. Environmental Protection Agency
  • Computer Security Resource Center , Special Publications, National Institute of Standards and Technology, Computer Security Division
  • IT Security Essential Body of Knowledge , United States Computer Emergency Readiness Team

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risk assessment process

A complete guide to the risk assessment process

Lucid Content

Reading time: about 7 min

Mark Zuckerberg, the founder of Facebook, once said, “The biggest risk is not taking any risk. In a world that's changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

While this advice isn't new, we think you’ll agree that there are some risks your company doesn’t want to take: Risks that put the health and well-being of your employees in danger.

These are risks that aren’t worth taking. But it’s not always clear what actions, policies, or procedures are high-risk. 

That’s where a risk assessment comes in.

With a risk assessment, companies can identify and prepare for potential risks in order to avoid catastrophic consequences down the road and keep their personnel safe.

risk assessment steps

What is risk assessment?

During the risk assessment process, employers review and evaluate their organizations to:

  • Identify processes and situations that may cause harm, particularly to people (hazard identification).
  • Determine how likely it is that each hazard will occur and how severe the consequences would be (risk analysis and evaluation).
  • Decide what steps the organization can take to stop these hazards from occurring or to control the risk when the hazard can't be eliminated (risk control).

It’s important to note the difference between hazards and risks. A hazard is anything that can cause harm , including work accidents, emergency situations, toxic chemicals, employee conflicts, stress, and more. A risk, on the other hand, is the chance that a hazard will cause harm . As part of your risk assessment plan, you will first identify potential hazards and then calculate the risk or likelihood of those hazards occurring.

The goal of a risk assessment will vary across industries, but overall, the goal is to help organizations prepare for and combat risk. Other goals include:

  • Providing an analysis of possible threats
  • Preventing injuries or illnesses
  • Meeting legal requirements
  • Creating awareness about hazards and risk
  • Creating an accurate inventory of available assets
  • Justifying the costs of managing risks
  • Determining the budget to remediate risks
  • Understanding the return on investment

Businesses should perform a risk assessment before introducing new processes or activities, before introducing changes to existing processes or activities (such as changing machinery), or when the company identifies a new hazard.

The steps used in risk assessment form an integral part of your organization’s health and safety management plan and ensure that your organization is prepared to handle any risk.  

Preparing for your risk assessment 

Before you start the risk management process, you should determine the scope of the assessment, necessary resources, stakeholders involved, and laws and regulations that you’ll need to follow. 

Scope: Define the processes, activities, functions, and physical locations included within your risk assessment. The scope of your assessment impacts the time and resources you will need to complete it, so it’s important to clearly outline what is included (and what isn’t) to accurately plan and budget. 

Resources : What resources will you need to conduct the risk assessment? This includes the time, personnel, and financial resources required to develop, implement, and manage the risk assessment. 

Stakeholders: Who is involved in the risk assessment? In addition to senior leaders that need to be kept in the loop, you’ll also need to organize an assessment team. Designate who will fill key roles such as risk manager, assessment team leader, risk assessors, and any subject matter experts. 

Laws and regulations: Different industries will have specific regulations and legal requirements governing risk and work hazards. For instance, the Occupational Safety and Health Administration (OSHA) sets and enforces working condition standards for most private and public sectors. Plan your assessment with these regulations in mind so you can ensure your organization is compliant. 

5 steps in the risk assessment process

Once you've planned and allocated the necessary resources, you can begin the risk assessment process.

Proceed with these five steps.

1. Identify the hazards

The first step to creating your risk assessment is determining what hazards your employees and your business face, including:

  • Natural disasters (flooding, tornadoes, hurricanes, earthquakes, fire, etc.)
  • Biological hazards (pandemic diseases, foodborne illnesses, etc.)
  • Workplace accidents (slips and trips, transportation accidents, structural failure, mechanical breakdowns, etc.)
  • Intentional acts (labor strikes, demonstrations, bomb threats, robbery, arson, etc.)
  • Technological hazards (lost Internet connection, power outage, etc.)
  • Chemical hazards (asbestos, cleaning fluids, etc.)
  • Mental hazards (excess workload, bullying, etc.)
  • Interruptions in the supply chain

Take a look around your workplace and see what processes or activities could potentially harm your organization. Include all aspects of work, including remote workers and non-routine activities such as repair and maintenance. You should also look at accident/incident reports to determine what hazards have impacted your company in the past.

Use Lucidchart to break down tasks into potential hazards and assets at risk—try our free template below.

hazard identification and analysis

2. Determine who might be harmed and how

As you look around your organization, think about how your employees could be harmed by business activities or external factors. For every hazard that you identify in step one, think about who will be harmed should the hazard take place.

3. Evaluate the risks and take precautions

Now that you have gathered a list of potential hazards, you need to consider how likely it is that the hazard will occur and how severe the consequences will be if that hazard occurs. This evaluation will help you determine where you should reduce the level of risk and which hazards you should prioritize first.

Later in this article, you'll learn how you can create a risk assessment chart to help you through this process.

4. Record your findings

If you have more than five employees in your office, you are required by law to write down your risk assessment process. Your plan should include the hazards you’ve found, the people they affect, and how you plan to mitigate them. The record—or the risk assessment plan—should show that you:

  • Conducted a proper check of your workspace
  • Determined who would be affected
  • Controlled and dealt with obvious hazards
  • Initiated precautions to keep risks low
  • Kept your staff involved in the process

5. Review your assessment and update if necessary

Your workplace is always changing, so the risks to your organization change as well. As new equipment, processes, and people are introduced, each brings the risk of a new hazard. Continually review and update your risk assessment process to stay on top of these new hazards.

How to create a risk assessment chart

Even though you need to be aware of the risks facing your organization, you shouldn’t try to fix all of them at once—risk mitigation can get expensive and can stretch your resources. Instead, prioritize risks to focus your time and effort on preventing the most important hazards. To help you prioritize your risks, create a risk assessment chart.

The risk assessment chart is based on the principle that a risk has two primary dimensions: probability and impact, each represented on one axis of the chart. You can use these two measures to plot risks on the chart, which allows you to determine priority and resource allocation.

risk assessment chart

Be prepared for anything

By applying the risk assessment steps mentioned above, you can manage any potential risk to your business. Get prepared with your risk assessment plan—take the time to look for the hazards facing your business and figure out how to manage them.

risk assessment

Now it's time to create your own risk management process, here are five steps to get you started.

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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  • About Risk Assessment

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Learn about Risk Assessment

History of risk at epa.

  • Getting Help

A brief introduction to risk assessment is presented below. If you have questions after reviewing this page and its links, please use the “Contact Us” form, linked on this page, for assistance.

While there are many definitions of the word risk, EPA considers risk to be the chance of harmful effects to human health or to ecological systems resulting from exposure to an environmental stressor.

A stressor is any physical, chemical, or biological entity that can induce an adverse effect in humans or ecosystems. Stressors may adversely affect specific natural resources or entire ecosystems, including plants and animals, as well as the environment with which they interact.

Risk Assessment Basics

EPA uses risk assessment to characterize the nature and magnitude of risks to human health for various populations, for example residents, recreational visitors, both children and adults. EPA also estimates risks to ecological receptors, including plants, birds, other wildlife, and aquatic life. The risks might be from specific chemical contaminants such as mercury or mixtures of many chemicals such as in oil spills. Other types of stressors include disease-causing microbial agents or stressful conditions such as anoxia (lack of oxygen) in surface waters.

Photo of a beach illustrating risk effects.

In general terms, risk depends on the following three factors:

  • How much of a stressor is present  in an environmental medium (e.g., soil, water, air) over what geographic area,
  • How much contact (exposure)  a person or ecological receptor has with the contaminated environmental medium, and
  • How it affects the health of humans (e.g., toxicity) or ecological receptors (e.g., fish killed by lack of oxygen) .

At EPA, environmental risk assessments typically fall into one of two areas:

  • Human Health

Following a planning and scoping stage, where the purpose and scope of a risk assessment is decided, the risk assessment process usually begins by collecting measurements that characterize the nature and extent of the hazard in the environment. For example, chemical concentrations in soils could be measured around the source of a spill. Information needed to predict how the contaminants may behave in the future also could be collected. Here are some useful links to get started:

  • Conducting a human health risk assessment
  • Conducting an ecological risk assessment

Based on the results of the planning and scoping phase, the risk assessor evaluates the frequency and magnitude of human and ecological exposures that may occur. Multiple lines of evidence are used to estimate potential consequences of contact with the contaminated medium, both now and in the future. Both the nature and extent of exposure and the effects of a stressor on humans or ecosystems are considered together. To characterize risks, the assessor predicts the probability, nature, and magnitude of the adverse effects that might occur.

Risk assessments should be based on a very strong knowledge base. Reliable and complete data on the nature and extent of contamination or occurrence of other stressor would be ideal. Understanding the movement and fate of chemicals, microbes, or other agents in the environment is needed. The risk assessor obtains available information that quantifies the relationships between the magnitude and frequency of human and ecological exposure and adverse outcomes.

In real life, however, information is usually limited for one or more of these key information needs. This means that risk assessors often must estimate exposures and use judgment to calculate risks. Consequently, all risk estimates include uncertainty. For this reason, a key part of all good risk assessments is a fair and open presentation of the uncertainties, including data gaps and limitations of models used to estimate exposure and effects.

The final phase of the assessment, risk characterization, includes both quantitative and qualitative descriptions of risk. The assessor clearly characterizes how reliable (or how unreliable) the resulting risk estimates really are. In general, where information is lacking, assessors use health protective assumptions, particularly in the early stages of a risk assessment.

Risk managers then use this information to help them decide how to protect humans and the environment from contaminants or other stressors. Note that “risk managers” can be federal or state officials whose job it is to protect the environment, business leaders who work at companies that can impact the environment, or private citizens who are making decisions regarding risk. The risk managers can conclude that more information is needed to reduce uncertainty in key factors driving risks and can request further data collection and a refined assessment. Thus, a risk assessment often is an iterative process . The assessors screen initial information to identify the factors that are likely to most influence risk. Researchers can identify and fill data gaps as feasible to refine their assessment of risk. With better estimates, the risk assessors and risk managers might further refine the scope of the risk assessment, which can guide further data collection or more realistic assumptions.

  • This is Superfund: A Community Guide To EPA's Superfund Program (12 pp, 1.2 Mb, About PDF )
  • Superfund Today: Focus on Revisions to Superfund's Risk Assessment Guidance (1999) (2 pp, 50 K, About PDF )
  • Risk-Screening Environmental Indicators (RSEI) Model - Use this model to explore data on releases of toxic substances from industrial facilities, to model how they might move through the environment, and to identify potential human exposures.

Risk Assessment Terminology

Most risk assessment terminology can be found in the Risk Assessment Glossary , but below we include the meaning behind "variability","uncertainty", and "probabilistic modeling."

Variability Variability This refers to a natural range of variation in environmental conditions and in responses of organisms to stressors. refers to a natural range of variation in environmental conditions and in responses of organisms to stressors. Exposure may vary from one person to the next depending on factors such as where one works, time spent indoors or out, where one lives, and what people eat or drink. For wildlife, exposure to different environmental media depends on season and whether they are migrating or more stationary when breeding.

In humans, there is substantial variation in responses to toxic chemicals or other stressors depending on such factors as age, genetic differences, preexisting medical conditions, and many other factors. In terrestrial and aquatic ecosystems, different kinds of organisms (e.g., plants, insects, vertebrates) have substantially different evolutionary histories that influence their responses to specific stressors.

Uncertainty Uncertainty This refers to our inability to know something for sure - it is often due to incomplete data. For example, when assessing the potential for risks to people, in vitro toxicology studies generally involve the dosing of animal or human cell cultures as a surrogate for the complete human body. refers to our inability to know something for sure - it is often due to incomplete data. For example, when assessing the potential for risks to people, in vitro toxicology studies generally involve the dosing of animal or human cell cultures as a surrogate for the complete human body. Since we don't really know how differently the complete human body system and the in vitro cell systems respond, EPA must use available information to estimate what might happen, and at what doses, to humans. Such information might include how a chemical exerts effects in the body, or the differences in a threshold dose for effects in cell cultures and in humans documented for other similar acting chemicals.

Sometimes we simply don’t know, and choose a health protective assumption, for example, that young children are more susceptible than adults to a specified stress. A factor of 10 may be used to lower the amount of chemical exposure considered safe for an adult to estimate an amount safe for children, for example.

Probabilistic Modeling Probabilistic Modeling is a technique that uses what is known about variability in parameters that influence risk to develop a probability distribution of outcomes. Instead of a yes/no statement of risk, the assessors try to define likelihood of an array of outcomes. , a related term, is a technique that uses what is known about variability in parameters that influence risk to develop a probability distribution of outcomes. Instead of a yes/no statement of risk, the assessors try to define likelihood of an array of outcomes. The result might characterize effects across a population (e.g., what percent might be severely compared to mildly affected). Or results might express the probability that environmental conditions might coincide in a way that produces exposures above a specified level.

The input data can be measured values and/or estimated distributions. A computer Monte Carlo simulation “samples” the input parameters thousands of times, calculating a point estimate of risk each time. Results are presented as a distribution of likely exposure or risk. Probabilistic models also can be used to evaluate the influence of uncertainty in various input parameters, such as environmental transport of chemicals, on estimates of risk.

Peer Review Peer Review is a documented critical review of a scientific/technical work product conducted by scientific experts who are independent of those who produced the product. is a documented critical review of a scientific/technical work product conducted by scientific experts who are independent of those who produced the product. Peer review can provide an independent evaluation of the assumptions, calculations, extrapolations, alternate interpretations, methodology, acceptance criteria, and conclusions pertaining to the scientific/technical work product.

  • Products and Publications Related to Scientific Coordination Produced by the Office of the Science Advisor (OSA)
  • Frequent Questions about Peer Review
  • Peer Review Handbook, 4th Edition, 2015
  • Peer Review Agenda

When evaluating the scientific rigor of our risk assessments, EPA utilizes both standing federal advisory groups of experts such as the Science Advisory Board (SAB) and the FIFRA Scientific Advisory Panel , as well as ad hoc panels to provide peer review. EPA will occasionally seek peer review from outside expert groups such as the National Academy of Science (NAS) for highly complex and/or critical scientific topics as linked above.

EPA was involved with risk assessment practices since EPA’s early days, although risk assessment per se was not a formally recognized process then. EPA completed its first risk assessment document in December 1975 called the Quantitative Risk Assessment for Community Exposure to Vinyl Chloride (Kuzmack and McGaughy, 1975*). The next significant document appeared in 1976: Interim Procedures and Guidelines for Health Risk and Economic Impact Assessments of Suspected Carcinogens (Train, 1976*). The preamble of this document, signed by the Administrator, signaled the Agency’s intent that "rigorous assessments of health risk and economic impact will be undertaken as part of the regulatory process." A general framework described a process to be followed in analyzing cancer risks of pesticides, and the document recommended that the health data be analyzed independently of the economic impact analysis. The following links exit the EPA website

NRC's Risk Assessment in the Federal Government: Managing the Process

  • 1990s: Shortly after the publication of the Red Book, EPA began issuing a series of guidelines for conducting risk assessments (e.g., in 1986 for cancer, mutagenicity, chemical mixtures, developmental toxicology, and in 1992 for estimating exposures). Although EPA efforts focused initially on human health risk assessment, the basic model was adapted to ecological risk assessment in the 1990s to deal with risks to plants, animals and whole ecosystems.

NRC's Science and Judgement in Risk Assessment

Science and Decisions: Advancing Risk Assessment  (NRC, 2009) (commonly referred to as the “Silver Book”) provided updated recommendations from the NAS aimed at improving technical analysis (by incorporating improvements in scientific knowledge and techniques) and utility of risk assessment for decision making.

NRC's Science and Decisions: Advancing Risk Assessment

For example, the level of detail of uncertainty and variability analyses should be determined by what is needed to inform risk management decisions. EPA used some of the recommendations from the Silver Book to support the development of the Human Health Risk Assessment Framework , and is currently working to incorporate other recommendations into its risk assessment policies and practices.

*Source: EPA Staff Paper on Risk Assessment Principles & Practices

Getting Help with Risk Assessment Issues

EPA is dedicated to helping you with whatever risk assessment issues you come across, but we recommend you try these first 2 steps before using the "contact us" option.

  • Contact the EPA hotline(s). EPA has several topic specific hotlines, we recommend you try these if you know what type of issue you are requesting assistance with.
  • Contact the Program Office or other Federal Agency. Some risk assessment related issues may actually be handled by other parts of the US Government.
  • Contact your local EPA Regional Office. EPA has in-house risk assessors on hand to assist our local offices and can direct you to the proper channels you need to report or receive assistance with a risk assessment issue. Visit our Where you Live page for contact information.

EPA Hotlines

This is a short list of hotlines related to risk:

For the full list of visit EPA Hotlines .

Program Offices

The table below outlines several EPA offices or other federal agencies that are responsible for assessing and managing risks associated with particular stressors. Though the EPA Office contacts listed below go to the head of each office, you will need to request a "risk assessment specialist" so you are put in touch with the appropriate EPA staff.

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Risk assessment

What is a risk assessment, what does a risk assessment include, who needs to conduct a risk assessment, how an employer carries out a basic risk assessment, advice for unison health and safety reps, covid-19 risk assessments.

Risk assessments are part of the risk management process and are included in the Management of Health and Safety at Work Regulations.

A risk assessment is the process of  identifying  what hazards currently exist or may appear in the workplace. A risk assessment defines which workplace hazards are likely to cause harm to employees and visitors.

Risks need to be considered in all aspects of the working environment. Here are some examples of the things that should be included in a risk assessment:

  • Hazards: electrical safety, fire safety, manual handling, hazardous substances, risk factors for repetitive strain injury, stress, violence, infectious diseases (COVID-19);
  • Tasks: cleaning with chemical substances, maintenance work or dealing with the public;
  • Organisational factors: staffing policies, systems of work, equipment-purchasing policies, consultation and participation, management techniques or working hours, shift patterns, lone working;

If you have a concern about health and safety, or if you are worried that your employer is not taking measures to prevent or minimise risk, contact your safety rep as soon as possible .

By law, every employer must conduct risk assessments on the work their employees do.  If the company or organisation employs more than five employees, then the results should be recorded with details of any groups of employees particularly at risk such as older, younger, pregnant or disabled employees.

Risk assessments should be simple to conduct, following a process that includes:

  • looking for and listing the risks to health and safety;
  • deciding who might be harmed and how;
  • checking that protective measures are effective;
  • evaluating the risks arising from the hazards and deciding whether existing precautions are adequate;
  • recording the findings;
  • reviewing the assessment from time to time and revising it when required, particularly if the building is refurbished, moved, or when there is a change in staffing.

Read more about general health and safety issues in the workplace .

Safety reps have an important role in examining employers’ risk assessments and deciding whether they are suitable and sufficient.

What is essential to remember as a safety rep is that risk assessments should be systematic and thorough, looking at what happens in real workplaces, not what employers believe should  happen.

These are some of the actions you can take to make sure that the risk assessment in your workplace is adequate:

  • talk to people who do the jobs and have practical understanding of the hazards and risks involved;
  • observe what happens by inspecting the premises;
  • check the written assessment and plans and make sure that all the risks are being covered. A clear strategy to improve health and safety in the workplace should be represented;
  • check that it’s clear who is responsible for implementing the action;
  • challenge shortcomings;
  • agree priorities for action with your employer.

As a safety rep, you have extensive rights under the Safety Representatives and Safety Committees Regulations (SRSC). These rights are set out in full under Regulations 4, 5, 6 and 7 of the SRSC and include the following:

  • the right to investigate health and safety matters;
  • the right to be consulted;
  • the right to inspect the workplace, at least four times each year;
  • the right to receive information, including risk assessments;
  • the right to take paid time off to perform your functions and undergo training.

COVID-19 has highlighted the importance of risk assessment in the workplace.

During the pandemic employers should make every reasonable effort to enable staff to work from home in the first instance. If this is not possible, then before workers can return to their normal workplace employers should undertake a risk assessment to make it ‘COVID–secure’

COVID-19 may cause you harm so employers must therefore put in place measures to prevent its spread.  A risk assessment is the process of  identifying  what hazards currently exist or may appear in the workplace. A risk assessment defines which workplace hazards are likely to cause harm to employees and visitors. Employers must keep their COVID assessments under constant review taking into account changes to government guidance, technological developments such as vaccines, and our improved understanding of how the disease is transmitted (including the emergence of new variants).

Employers must identify all those for whom they have a duty of care, whether they are staff or service-users who are classed as being either at most or moderate risk from COVID-19.

The most comprehensive data yet on inequalities in COVID-19 risks and outcomes at population level has now been published by Public Health England.

Our Risk Assessment Guide for Safety Reps  contains detailed guidance on COVID-19 assessments.

COVID-19 Risk Assessment Checklist for Safety Reps

Information for UNISON members working in the NHS

This confirms disproportionate rates of COVID-19 diagnosis and deaths for Black people.

We are concerned about the disproportionate impact of COVID-19 on Black workers.

We have developed a template risk assessment for Black and other vulnerable workers. 

Our sector-based risk assessment advice also includes guidance on taking account of the increased risk to Black staff.

An increasing number of employers have put in place specific processes to assess risks for Black workers. For example, Aneurin Bevan Hospital Board has produced risk assessment forms and guidance. These can be found in the resources section below.

Other major areas of disparity include age; sex; geography; deprivation levels; occupation; co-morbidities and obesity.

There is a critical role for union reps across the UK in working with employers to ensure that:

  • risks are addressed effectively and meaningfully
  • appropriate action is taken to support staff to work safely
  • employers properly listen to the issues and concerns staff have about their circumstances

Employers should consider all groups at risk through COVID-19.

  • A risk assessment is the process of identifying what hazards exist, or may appear in the workplace, how they may cause harm and to take steps to minimise harm.
  • Accident rates are lower where employees genuinely feel they have a say in H&S matters (14%), compared with workplaces where employees don’t get involved (26%).
  • Workplaces with H&S committees where some members are selected by unions have significantly lower rates of work-related injury than workplaces with no co-operative H&S management.

How can UNISON help me stay safe in the workplace?

Over the years UNISON has campaigned to raise awareness of safety in the workplace. UNISON representatives have used risk assessments to press for and win better working conditions, more resources for health and safety and greater workforce involvement in health and safety issues.

UNISON’s volunteer safety reps play a very important role in inspecting premises and working with employers to make sure the workplace is as risk-free as possible. Find out more about becoming a safety rep .

What should I do if I am injured in the workplace?

Any serious incidents must be reported by law to the Health and Safety Executive (HSE) so you need to make sure your employer knows about the incident. Serious incidents include death in service, major injuries, other dangerous incidents such as the collapse of scaffolding, disease, or any injury that prevents employees from working for over three days.

What should I do if I find a risk in the workplace?

Notify your safety rep or your employer if you find a risk in your workplace. Your employer should take steps to eliminate or reduce the risk and record their findings and any actions taken.

Health and Safety Inspections at Work: A guide for UNISON safety reps

1 December 2022

A guide on workplace health and safety inspections – an invaluable tool for all UNISON health & safety reps

14 February 2022

A guide for UNISON safety reps on risk assessment, detailing how to work with employers to ensure that risk assessments are done properly in the workplace. Revised February 2022.

Template-risk-assessment-for-Black-and-other-Vulnerable-Workers.pdf

13 October 2020

ABUHB Risk Assessment Toolkit BAME staff May 2020

5 June 2020

RISK ASSESSMENT Guidance ABUHB May 2020

Fire safety information sheet aug 17.

25 September 2017

This information sheet aims to give safety reps a basic understanding of fire safety and fire risk assessments under the current law.

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Legal disclaimer

The information contained within this article is not a complete or final statement of the law and is based on the laws of England, Wales, Scotland and Northern Ireland.

While UNISON has sought to ensure that the information is accurate and up to date, it is not responsible and will not be held liable for any inaccuracies and their consequences, including any loss arising from relying on this information. If you are a UNISON member with a legal problem, please contact your branch or region as soon as possible for advice.

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risk assessment definition

Risk Assessment Matrix: Definition, Examples, and Templates

Fahad Usmani, PMP

November 28, 2022

risk assessment matrix

A risk assessment matrix is a tool for assessing and prioritizing risks in risk management .

This blog post will discuss the risk assessment matrix, how to create a risk assessment matrix, and provide examples and a template you can use to create your risk assessment matrix.

What is a Risk Assessment Matrix?

Project managers evaluate and prioritize risks using a risk assessment matrix . Many experts refer to this matrix as either a probability and severity risk matrix or a risk matrix.

The matrix allows project managers to plot the severity of the consequences and the likelihood of the event occurring from low to high. This information helps rank the risk.

Creating a risk assessment matrix can be done in various ways; however, the most important things to keep in mind are that it should be concise, simple, and adapted to the project’s particular circumstances.

Risk ranking helps project managers separate high and low-rank risks. They can develop a risk management plan for high-ranked risks and keep low-level risks on a watchlist. Prioritizing helps the project management team focus on high-priority risks and saves resources in investing in low-priority risks.

The higher the severity and likelihood of an event, the greater the risk. Many factors influence the decision of what is high-risk. For example, if the consequences of an event are not severe, it may be considered a low-ranking risk.

How Does a Risk Matrix Work?

Risk assessment is the probability of an event multiplied by its impact. You can break probability and impact levels into verbal and numerical scales.

Severity in risk assessment

Risks can be grouped into three zones:

  • The High Risk (Red Color) – Unacceptable
  • Moderate Risk (Yellow Color) – May or May Not Be Acceptable
  • The Low Risk (Green Color) – Considered Acceptable

Determining whether a risk is acceptable often comes from a cost/benefit calculation . For instance, it is difficult to justify paying millions of dollars to prevent an injury caused by ergonomics, yet investing the same millions of dollars in preventing a chemical explosion might be worth it.

Benefits of a Risk Assessment Matrix

The benefits of the risk assessment matrix include the following:

  • It Prioritizes Risks: Project managers can prioritize and focus on high-ranking risks by assessing their probability and impact.
  • It Improves Communication: A risk assessment matrix improves communication between different departments and stakeholders by providing a common language for discussing risks.
  • It Facilitates Decision Making: The matrix helps develop risk response plans.
  • It Improves Risk Understanding: The risk assessment matrix creation process helps the project team understand the risks and their interrelationships.
  • It Helps Develop Budgets: Project managers can calculate contingency reserves and plan the budget after identifying and assessing the risks.

How To Create A Risk Assessment Matrix

The steps to create a risk assessment matrix are as follows: 

Risk Identification

The first step in creating a risk assessment matrix is risk identification. To acquire a range of perspectives, identify as many risks as possible.

Some organizations have risk checklists based on past project experiences. These checklists help identify risks quickly for new projects. 

Afterward, project managers can find more risks by brainstorming with the team, reviewing project documents , and talking to stakeholders .

The different types of risks include:

  • Internal Risks: These risks come from within the company, and the project team has some control over them. For example, an ineffective team member, unrealistic deadlines, or a lack of resources.
  • External Risks: These risks come from outside the company, and the project team has no control over them. For example, natural disasters, supplier problems, or changes in the market.
  • Strategic Risks: These risks come from the organization’s strategy. For example, a new product launch might fail, or a competitor might release a similar product.
  • Operational Risks: These risks are caused by day-to-day operations. For example, equipment breakdown, sick leave, mistakes, process errors, etc.
  • Financial Risks: These risks come from the organization’s finances. For example, a decrease in sales, an increase in costs, or a change in interest rates.

Risk Analysis

The project team analyzes the likelihood of each risk after identifying those risks. They need to conduct a risk assessment to determine how likely they are to cause damage.

There are several ways to perform a risk analysis. One popular method is a SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats. Another common method is PESTLE analysis , which stands for Political, Economic, Social, Technological, Legal, and Environmental factors.

Assessing Risk Impact

After analyzing the risks for their probabilities, the project management team will assess their impact severity and the potential loss incurred if the risk occurs.

There are a lot of different approaches to determining the seriousness of the possibility and the impact. One of the more prevalent approaches is using a scale that ranges from one to five, with one denoting the smallest probability and five denoting the greatest probability.

In addition, the impact intensity is graded on a scale from one to five, with one being the least significant impact and five representing the most significant impact. After estimating the severity of probability and impact of the risk, team members multiply them to get the risk ranking.

Risk Prioritization

The last step in creating a risk assessment matrix is prioritizing the risks. This is done by ranking them from highest to lowest.

Risks can be divided into four levels: high-priority risks, major risks, moderate risks, and minor risks.

  • High Priority Risks: These risks have a high probability of occurring and could significantly impact the project.
  • Major Risks: These risks have a moderate probability of occurring and could impact the project.
  • Moderate Risks: These risks have a low probability of occurring and could moderately impact the project.
  • Minor Risks: These risks have a very low probability and impact and a minor effect on the project. These risks are mentioned in the watchlist for monitoring.

The project manager will develop risk response plans for all risks except those on the watchlist.

How to Categorize Risks in a Risk Assessment Matrix

You can define risk assessment matrixes differently, but the most common is plotting risks on the x-axis and probabilities on the other.

This results in a matrix with four quadrants, each representing a distinct risk level. The dangers located in the upper left quadrant have a high chance as well as high severity, and they are considered to be the most severe.

The dangers located in the bottom right quadrant have a low likelihood and severity, and they are the hazards that are regarded as the least serious.

How to Use the Result of a Risk Matrix

You use the output of the risk matrix to develop a risk management plan, more specifically, a risk response plan.

You have a list of prioritized risks. Therefore, you will begin by formulating a response strategy for high-level risks and move on to medium-level threats.

You won’t bother developing a reaction plan for low-level risks; instead, you’ll keep track of them on a watch list and continue monitoring them until the project is through.

You will work on developing a risk response strategy if the severity of any low-risk situation increases from a low level to a high level.

In addition, you can maintain a high-priority risk on a watchlist even if its severity level decreases and it transitions into a low-priority risk if the situation warrants it.

Example Of a Risk Assessment Matrix

Here is an example of a simple risk assessment matrix to evaluate the risks.

The matrix shows the risk associated with returning to work during the pandemic.

Risk: Flawed policies to prevent the spread of the virus to employees and visitors.

What Can Go Wrong?

  • Employees feel uncomfortable wearing masks for a long period and remove them while talking with colleagues. The virus spreads throughout the team.
  • The customer refuses to wear a mask and is asked to leave the premises.
  • Employees and customers not staying six feet apart.

Mitigation(s)

  • Apply penalties for not wearing masks. 
  • Assign places where employees can remove the masks, finish breakfast, lunch, etc.
  • Keeping signs on the front door that refuse people entry without a mask. 
  • Placing dots six feet apart to instruct people on where to stand in line and prevent crowding.

Risk Assessment Matrix Template

Let’s review risk assessment matrix templates.

The risk categories range from low to high, and probability ranges from highly likely to very unlikely. The risk rating can be seen by finding the intersection of both criteria.

The following example shows the risk assessment matrix template 4X4.

Risk Assessment Matrix Template

Limitations of Risk Matrix

A risk matrix is useful in risk management but has some limitations. These limitations are:

  • Inefficient Decision-Making: Sometimes, poor categorization of risk can cause poor assessment of risks, leading to poor decision-making.
  • Biased Assessment: Many times, due to biases in risk assessment, risk levels can be miscalculated, and it can affect the risk management plan.
  • Can Consume Time: Sometime, over-analysis can lead to a waste of time and resources.
  • No Consideration for Timeframe: The risk matrix does not consider how risk can change during the project life cycle.

One of the most important tools in risk management is a risk assessment matrix. The management team for the project can conduct an effective risk analysis and establish a priority order for the risks associated with the project because they created a risk assessment matrix.

A risk assessment matrix is a living document that should be regularly reviewed and updated as new risks arise or the likelihood or impact of existing risks changes.

risk assessment definition

I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.

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Good explanation !

Thank you for the brief-yet-thorough explanation, Fahad. Really helpful. Best of luck!

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EU AI Act: first regulation on artificial intelligence

The use of artificial intelligence in the EU will be regulated by the AI Act, the world’s first comprehensive AI law. Find out how it will protect you.

A man faces a computer generated figure with programming language in the background

As part of its digital strategy , the EU wants to regulate artificial intelligence (AI) to ensure better conditions for the development and use of this innovative technology. AI can create many benefits , such as better healthcare; safer and cleaner transport; more efficient manufacturing; and cheaper and more sustainable energy.

In April 2021, the European Commission proposed the first EU regulatory framework for AI. It says that AI systems that can be used in different applications are analysed and classified according to the risk they pose to users. The different risk levels will mean more or less regulation. Once approved, these will be the world’s first rules on AI.

Learn more about what artificial intelligence is and how it is used

What Parliament wants in AI legislation

Parliament’s priority is to make sure that AI systems used in the EU are safe, transparent, traceable, non-discriminatory and environmentally friendly. AI systems should be overseen by people, rather than by automation, to prevent harmful outcomes.

Parliament also wants to establish a technology-neutral, uniform definition for AI that could be applied to future AI systems.

Learn more about Parliament’s work on AI and its vision for AI’s future

AI Act: different rules for different risk levels

The new rules establish obligations for providers and users depending on the level of risk from artificial intelligence. While many AI systems pose minimal risk, they need to be assessed.

Unacceptable risk

Unacceptable risk AI systems are systems considered a threat to people and will be banned. They include:

  • Cognitive behavioural manipulation of people or specific vulnerable groups: for example voice-activated toys that encourage dangerous behaviour in children
  • Social scoring: classifying people based on behaviour, socio-economic status or personal characteristics
  • Biometric identification and categorisation of people
  • Real-time and remote biometric identification systems, such as facial recognition

Some exceptions may be allowed for law enforcement purposes. “Real-time” remote biometric identification systems will be allowed in a limited number of serious cases, while “post” remote biometric identification systems, where identification occurs after a significant delay, will be allowed to prosecute serious crimes and only after court approval.

AI systems that negatively affect safety or fundamental rights will be considered high risk and will be divided into two categories:

1) AI systems that are used in products falling under the EU’s product safety legislation . This includes toys, aviation, cars, medical devices and lifts.

2) AI systems falling into specific areas that will have to be registered in an EU database:

  • Management and operation of critical infrastructure
  • Education and vocational training
  • Employment, worker management and access to self-employment
  • Access to and enjoyment of essential private services and public services and benefits
  • Law enforcement
  • Migration, asylum and border control management
  • Assistance in legal interpretation and application of the law.

All high-risk AI systems will be assessed before being put on the market and also throughout their lifecycle.

General purpose and generative AI

Generative AI, like ChatGPT, would have to comply with transparency requirements:

  • Disclosing that the content was generated by AI
  • Designing the model to prevent it from generating illegal content
  • Publishing summaries of copyrighted data used for training

High-impact general-purpose AI models that might pose systemic risk, such as the more advanced AI model GPT-4, would have to undergo thorough evaluations and any serious incidents would have to be reported to the European Commission.

Limited risk

Limited risk AI systems should comply with minimal transparency requirements that would allow users to make informed decisions. After interacting with the applications, the user can then decide whether they want to continue using it. Users should be made aware when they are interacting with AI. This includes AI systems that generate or manipulate image, audio or video content, for example deepfakes.

On December 9 2023, Parliament reached a provisional agreement with the Council on the AI act . The agreed text will now have to be formally adopted by both Parliament and Council to become EU law. Before all MEPs have their say on the agreement, Parliament’s internal market and civil liberties committees will vote on it.

More on the EU’s digital measures

  • Cryptocurrency dangers and the benefits of EU legislation
  • Fighting cybercrime: new EU cybersecurity laws explained
  • Boosting data sharing in the EU: what are the benefits?
  • EU Digital Markets Act and Digital Services Act
  • Five ways the European Parliament wants to protect online gamers
  • Artificial Intelligence Act

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This section features overview and background articles for the general public. Press releases and materials for news media are available in the news section .

IMAGES

  1. When & How to Do a Risk Assessment

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  2. Risk Assessment PowerPoint

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  3. What Is A Risk Assessment

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  4. Risk Matrix

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  5. An 8-Step Process for Facility Security Risk Assessment

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  6. How to Complete a Risk Assessment

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VIDEO

  1. Risk Criteria

  2. Risk Assessment (problem solving)

  3. Risk Assessment Definition

  4. Risk Management in Strategic Planning by BSC Designer

  5. Understanding Risk Assessment: A Guide for English Language Learners

  6. Risk assessment Meaning

COMMENTS

  1. Risk Assessment: Process, Examples, & Tools

    A risk assessment is a systematic process of identifying, analyzing, and controlling hazards and risks present in a situation or a place. It aims to determine which measures should be put in place to eliminate or control the risks, and specify which ones should be prioritized according to their likeliness and impact. Learn the types, steps, and examples of risk assessments for different industries and scenarios.

  2. What is a Risk Assessment?

    Risk assessment is the process of identifying hazards that could negatively affect an organization's ability to conduct business. These assessments help identify inherent business risks and prompt measures, processes and controls to reduce the impact of these risks on business operations.

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  5. risk assessment

    The process of identifying risks to organizational operations, assets, individuals, and the Nation from the operation of an information system. Part of risk management, involves threat and vulnerability analyses, and considers mitigations provided by security controls. Synonymous with risk analysis. See sources and definitions from various standards and guidelines.

  6. Risk Assessment and Analysis Methods: Qualitative and Quantitative

    Learn the purpose, techniques and advantages of risk assessment and analysis methods, such as qualitative and quantitative risk analysis, for different types of business risk. Qualitative risk analysis is scenario-based and based on simple scales, while quantitative risk analysis is based on probabilistic models and objective values.

  7. Risk Assessment and Management: A Complete Guide

    A risk assessment is a systematic process of identifying hazards and evaluating any associated risks within a workplace, then implementing reasonable control measures to remove or reduce them. It is a legal requirement for employers and self-employed people, and it helps prevent accidents, injuries and deaths. Learn about different types of risk assessments, why they are important, who is responsible and when to carry them out.

  8. RISK ASSESSMENT

    Risk assessment is the process of finding out how much risk is involved in doing something, or a report of how much of a risk someone or something might be. It can be used in business, management, or health contexts. See examples, synonyms, and translations of risk assessment in English.

  9. Risk Assessment: Definition, Principles, Stages & Examples

    Risk Assessment is the structured examination of uncertain situations wherein potential threats and their potential consequences are identified. This is done to determine appropriate interventions to eliminate or control these risks and prioritize them based on their likelihood and potential impact.

  10. RISK ASSESSMENT definition

    Risk assessment is the process of finding out how much risk is involved in doing something, or the report of how much of a risk someone or something might be. It can also be called risk analysis or risk management. See more meanings, synonyms, translations and examples from the Cambridge Dictionary.

  11. What Is a Risk Assessment? (With Benefits, How-To and Types)

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  12. CCOHS: Hazard and Risk

    Learn what risk assessment is, why it is important, and how to do it for your workplace. Find out how to identify hazards, rank risks, evaluate risks, and control risks with the CSA Standard Z1002 and other resources.

  13. Risk Assessment Definition and Goals

    DEFINITION OF RISK ASSESSMENT Section I of the bulletin defines risk assessment as "a scientific and/or technical document that assembles and synthesizes scientific information to determine whether a potential hazard exists and/or the extent of possible risk to human health, safety or the environment" (OMB 2006a, p. 23).

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    A risk assessment is a process used to identify potential hazards and analyze what could happen if a disaster or hazard occurs. There are numerous hazards to consider, and each hazard could have many possible scenarios happening within or because of it. Use the Risk Assessment Tool to complete your risk assessment.

  15. A complete guide to the risk assessment process

    During the risk assessment process, employers review and evaluate their organizations to: Identify processes and situations that may cause harm, particularly to people (hazard identification). Determine how likely it is that each hazard will occur and how severe the consequences would be (risk analysis and evaluation).

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    Learn how to identify, assess and control risks in your business or workplace under health and safety law. Find out the steps, template and examples for managing risk assessment and how to subscribe for free health and safety news and updates.

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    In the following we summarise the risk definition text from SRA (2015a): ... Risk assessment and risk management are established as a scientific field and provide important contributions in supporting decision-making in practice. Basic principles, theories and methods exist and are developing. This review paper has placed its focus on recent ...

  18. About Risk Assessment

    Risk assessment is a scientific process. In general terms, risk depends on the following three factors: How much of a stressor is present in an environmental medium (e.g., soil, water, air) over what geographic area, How much contact (exposure) a person or ecological receptor has with the contaminated environmental medium, and

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    Risk assessments are part of the risk management process and are included in the Management of Health and Safety at Work Regulations. A risk assessment is the process of identifying what hazards currently exist or may appear in the workplace. A risk assessment defines which workplace hazards are likely to cause harm to employees and visitors.

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    Risk assessments. You have a legal duty to assess the risks to the health and safety of your employees (and risks to the health and safety of persons not in your employment) to which they are exposed while they are at work. In carrying out a risk assessment: You should consult employees and health and safety representatives.

  22. Risk Assessment Matrix: Definition, Examples, and Templates

    Risk assessment is the probability of an event multiplied by its impact. You can break probability and impact levels into verbal and numerical scales. Risks can be grouped into three zones: The High Risk (Red Color) - Unacceptable. Moderate Risk (Yellow Color) - May or May Not Be Acceptable. The Low Risk (Green Color) - Considered Acceptable.

  23. Transforming care planning: linking risk assessment and risk management

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  24. How To Become A Risk Analyst

    Risk is part of doing business in every economic sector, and risk analysts help organizations manage that inevitable uncertainty. These professionals use qualitative and quantitative analytical ...

  25. PDF 2024 National Money Laundering Risk Assessment (NMLRA)

    This risk assessment reflects an evolving understanding of the key money laundering threats, including crimes that generate illicit proceeds and criminal actors involved in the laundering process. The 2024 NMLRA highlights how both old and relatively new schemes and threat actors are adapting to maximize

  26. A guide to high-risk AI systems under the EU AI Act

    the AI system is intended to perform a preparatory task to an assessment relevant for the purpose of the use cases [otherwise listed as potential high-risk AI uses in the relevant annex to the Act]. However, the EU AI Act is also clear that any AI system will automatically be considered to be a 'high-risk' AI system if the AI system ...

  27. EU AI Act: first regulation on artificial intelligence

    AI Act: different rules for different risk levels. The new rules establish obligations for providers and users depending on the level of risk from artificial intelligence. While many AI systems pose minimal risk, they need to be assessed. Unacceptable risk. Unacceptable risk AI systems are systems considered a threat to people and will be banned.