Risk assessment example

Risk analysis methods are techniques used to assess the risks of a project or process. These methods help to make decisions that allow the implementation of preventive measures to avoid potential hazards or reduce their impact.

The what if analysis is a simple and easy to understand tool for any manager. It is usually used in the first phase of management when risks are just being identified. Afterwards, this method can be complemented with a deeper analysis of the risks and their causes through other additional techniques.

This risk management methodology consists of scheduling meetings between officials or collaborators who have an in-depth knowledge of the process being analyzed. The first meeting is scheduled for brainstorming, where questions are asked to help identify possible problems. Hence the name “what if”, since each of these questions begins in this way:

In the subsequent meetings the group of experts will find relevant answers to address the questions that were asked, seeking to find causes, consequences and recommendations. This is precisely one of the main advantages of the what if analysis, as it allows for a comprehensive review of a broad category of risks.

What are risk assessment methods?

Risk analysis methods are techniques used to assess the risks of a project or process. These methods help to make decisions that allow the implementation of preventive measures to avoid potential hazards or reduce their impact. It is true that there is no single risk methodology.

How is a company’s risk level classified?

There are many classifications of business risks: strategic, operational, financial and incidental. In turn, all these risks can be sub-classified.

What is a risk and examples?

Hazard vs. risk example

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For example, a hazard could be the use of a ladder in poor condition. The ladder itself is a hazard. The risk in this case would be the probability of someone falling multiplied by the severity of the damage it could cause.

What is risk assessment?

Since the financial crisis that began in 2008, risk analysis has taken on special relevance in the internal management of organizations. Previously, work in this area was carried out in a non-systematic and isolated way in all entities. Since then, however, companies have begun to strengthen internal control by using risk management in all areas.

To this end, it integrates tools (such as evaluation criteria, formulas, etc.) and knowledge databases (in particular for the diagnosis of security measures), as an essential complement to the risk analysis framework.

A structured approach is necessary to identify all potential risk situations in order to analyze the most critical ones and to identify actions to reduce the risk to acceptable levels.

MEHARI integrates security controls questionnaires, which allows to evaluate the level of quality of the mechanisms and solutions aimed at risk reduction. Security controls or measures are grouped into services and security domains. The following steps are necessary to perform this evaluation:

How many risk assessments need to be performed?

That is why it could be said that the occupational risk assessment should be done only once in the life of the company. Regarding the obligation, this falls on the company’s managers, since it is mandatory for every company to have an occupational risk assessment and a subsequent prevention plan.

What are the qualitative and quantitative risks?

Risk assessment generally takes one of two forms: quantitative, which seeks to identify risks and quantify them on a numerical scale (e.g., 0.0 to 1.0 or 1 to 10); and qualitative, which is based on obtaining an overall impression of the risks in order to rate them.

Why is it important to assess audit risk?

Hence the importance of assessing Audit Risk. Audit risk is the risk that the firm runs of expressing an erroneous opinion because the financial statements contain material misstatements. The objective as auditors is to reduce this risk to an acceptable low level.

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Types of risks

The purpose of risk assessment is none other than to facilitate decision-making and the adoption of measures to meet the organization’s obligations in terms of Occupational Health and Safety.

There are numerous procedures for carrying out risk assessment in line with the OHSAS-18001 standard, from the most subjective ones based on the opinion of workers to others of a quantitative nature. They can be classified as follows:

Including methods for risk assessments imposed by specific regulations, others that require specialized methods of analysis, risks for which there are no specific regulations but international standards and general assessments.

There are two types, those motivated by industrial regulations and those motivated by labor regulations. Both risks must be considered in an OHSAS 18001 Occupational Health and Safety Management System.

A list shall be drawn up that includes all work activities, both internal and external to the organization’s facilities, referring to any task defined for a production process or the provision of a service. It will be necessary to specify the duration and frequency of the task, the place where it is executed and the person who carries it out, the training received, work procedures, installations, machines and equipment, work organization, control measures…

How to measure audit risk?

Some recommendations in risk writing. Write clearly, specifically and directly without giving rise to ambiguities. Use a maximum of 10 words to describe each risk. Do not write starting as “lack of…” or other similar phrases that carry implicit bias toward a particular alleged solution.

What is risk assessment in internal control?

Preliminary control risk assessment is the process of evaluating the effectiveness of an entity’s accounting and internal control systems in preventing or detecting and correcting material misstatements.

What are the 4 direct objectives of the Magerit methodology?

MAGERIT pursues the following Direct Objectives: Raise awareness among those responsible for information organizations of the existence of risks and the need to manage them …. Help to discover and plan the appropriate treatment to keep risks under control Indirect.

Occupational risk assessment table

The objective of this assessment is to know the characteristics of the hazard and its origin, taking into account the probability of occurrence, the level of impact and scenarios in which it may occur.

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As its name indicates, in this stage the possible risks, both internal and external, to which the company is facing must be identified. They can be seen as positive insofar as they can contribute to the improvement of certain activities or negative because they can directly affect the fulfillment of objectives.  For this it is necessary to have all the necessary and updated information of the company.

After identifying the risks, the next step in the evaluation is to analyze them. This analysis can be carried out taking into account different degrees of detail and complexity, depending on what is to be achieved with the analysis. On the other hand, it is important to know the availability and reliability of information and resources.

This step is fundamental because it contributes directly to decision making. When we talk about valuation we refer to the comparison made with the results obtained in the analysis and the criteria established for each risk in order to determine when an additional plan needs to be implemented.

By Rachel Robison

Rachel Robison is a blogger who collects information on court filings and notices.