How to Do a Risk Assessment

Performing a risk assessment is one of the most important steps in the risk management process. It is a method of identifying and managing threats that may negatively impact an organization, project, business venture or other endeavor. The importance of this step should not be underestimated. Expect the risk assessment process to be rather difficult, but in the end the pain is worth the gain.

Difficulty: Moderately Challenging

Instructions

1. Determine a risk assessment strategy that best suits the needs of your organization. Risk assessment is a useful tool in many environments including nonprofits, insurance companies, health organizations and financial institutions. Each environment has special needs to consider when devising a risk assessment. Know and address these needs to allow for a more accurate and detailed risk assessment.

2. Make risk assessment part of your organization's strategic plan. It is best to have a team of staff members who represent all facets and functions of the organization to conduct a risk assessment at least twice per year.

3. Schedule adequate time to ensure that your risk assessment is carefully planned, documented and properly executed. Incorporate the assessment into your yearly organizational maintenance routine. Establish specific procedures and standards regarding expectations surrounding the task.

4. Identify risks or hazards. Define your organization risks by measuring the magnitude of your potential loss and the probability of the loss occurring.

5. Record findings and implement precautionary and preventative measures to manage your organization's risk factors.

6. Understand that conducting a risk assessment is difficult and prone to errors. Once the risk is identified and assessed, realize that analyzing the results is often problematic in itself.

7. Minimize errors by ensuring that the measurements of the risk mentioned in Step 4 are as specific as possible.