Risk assessment guides are tools used by organisations to measure the amount of risk involved in any sort of project or activity. You may already be familiar with risk assessment guides as they apply to education, health, or a myriad of other subjects in your everyday life.
A risk assessment guide gives business owners the tools necessary to ask a series of questions that will determine whether or not the plans or strategies they are formulating will result in a positive or negative outcome.
There are four main steps in the risk assessment process:
Start by identifying the risk and the threat it is perceived to present;
Evaluate the likelihood that the risk will result in a loss (physical loss, reduced sales, etc);
Determine the best-case and worst-case scenarios; and
Use the information you’ve gathered to estimate the actual risk or damage you can expect.
Let’s say, for example, you run a large automobile insurance company. You want to set a minimum and maximum age limit for the drivers you’ll list on your policies. You will need to use a risk assessment guide to determine the minimum age that a driver must be to obtain insurance with your company. You’ll find that the likelihood of a driver having an accident (the risk) will be much different with a 17 year old driver than with a 40 year old driver. The same applies to the maximum driver age. Perhaps a 40 year old driver will have less accidents than an older 80 year old driver. You’ll have to gather reports and make assessments to determine the best and worst case scenarios for each risk group.
Risk assessment is critical to risk management. Risk management may apply to workplace safety, sales, and even customer service. Do you have risk assessment and management tools in place within your organisation?
