What is the purpose of risk assessment?

The purpose of risk assessment is centered around the evaluation of potential risks that could affect an organization or project. This process involves identifying various risks and analyzing their likelihood of occurrence, as well as the potential impact they could have if they were to materialize. By understanding both the probability and the consequences of different risks, organizations can prioritize their risk management efforts, allocate resources more effectively, and develop strategies to address those risks.

Risk assessment serves as the foundation for risk management practices by providing crucial information that guides decision-making. It helps organizations not only to recognize existing vulnerabilities but also to anticipate and prepare for future challenges. In contrast, while the communication of risks, implementation of mitigation measures, and ongoing tracking of risks are important components of overall risk management, these activities follow the initial assessment stage where risks are evaluated. Therefore, the primary focus of risk assessment is on understanding the risks themselves.