Risk Assessment Methods

Continuity, Resilience & Recovery

Risk assessment has become an integral part of the risk management process. In fact, a project cannot be approved for execution unless a thorough assessment of risks has been done. While the methodology remains the same, the types of risks will vary a great deal in terms of seriousness, frequency and impact. A few risk assessment samples are highlighted to give the reader an understanding of the risk assessment procedure.

Risk identification is the process that leads to risk assessment. Without proper identification of risks, projects risks cannot be assessed and reports related to it generated. Hence, by using many techniques like the SWOT Analysis, PESTLE Analysis, Delphi technique, Interviewing, Brainstorming, etc, a major proportion of project risks are identified. While not all of them may be serious, there are those which can make a huge impact on the project's functioning and result. Hence, this identification leads to the process of risk assessment, where risks are assessed for their probability and impact.

Methods

• Use a what-if analysis to identify threats and hazards. What-if questions are asked about what could go wrong and about what would happen if things do go wrong. This type of analysis is a brainstorming activity and is carried out by people who have knowledge about the areas, operations, and processes that may be exposed to hazardous events and conditions.
• Use a checklist of known threats and hazards to identify your threats and hazards. The value of this type of analysis depends upon the quality of the checklist and the experience of the user.
• Use a combination of checklists and what-if analysis to identify your threats and hazards. Checklists are used to ensure that all relevant what-if questions are asked and discussed, and to encourage a creative approach to risk assessment.
• Use a hazard and operability study (HAZOP) to identify your threats and hazards. If you need to do a thorough analysis, this method is for you. However, it requires strong leadership and is costly and time consuming. It also assumes that you have a very knowledgeable interdisciplinary team available to you, one with detailed knowledge about the areas, operations, and processes that may be exposed to hazardous events and conditions.
• Use a failure mode and effect analysis (FMEA) to identify potential failures and to figure out what effect failures would have. This method begins by selecting a system for analysis and then looks at each element within the system. It then tries to predict what would happen to the system as a whole when each element fails. This method is often used to predict hardware failures and is best suited for this purpose.
• Use a fault tree analysis (FTA) to identify all the things that could potentially cause a hazardous event. It starts with a particular type of hazardous event and then tries to identify every possible cause.