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Glossary

Risk Assessment

Risk Assessment - Summary

Risk assessment is a systematic process for identifying and evaluating risks that arise from a given situation or decision. It aims to estimate potential hazards and their likelihood in order to take appropriate measures to minimize risks. Risk assessment is an important component of risk management and is applied in various fields such as finance, the environment, safety, and healthcare.

Risk Assessment - Detail

Definition

Risk assessment is a structured and systematic approach to identifying, analyzing, and assessing risks. It involves the collection and evaluation of information about potential hazards, the likelihood of their occurrence, and the possible impacts. The goal of risk assessment is to support decision-makers in selecting appropriate measures for risk reduction and thus achieving the best possible outcome considering the given resources.

Objectives of Risk Assessment

       
  • Identification of risks and sources of hazards
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  • Assessment of the likelihood and potential impacts
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  • Prioritization of risks
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  • Development of measures for risk management
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  • Monitoring and adjustment of risk management

Phases of a Risk Assessment

       
  1. Risk Analysis: In this phase, potential hazards and risks are identified. This also includes the collection of data and information relevant for the assessment of risks.
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  3. Risk Evaluation: The assessed risks are analyzed in terms of their likelihood and possible impacts and categorized.
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  5. Risk Mitigation: Based on the previous phases, appropriate measures are developed and implemented to reduce or control the risks.
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  7. Risk Monitoring and Adjustment: Risk management is continuously monitored and adjusted as needed to respond to changes in the risk environment or within the company itself.

Methods of Risk Assessment

There are various methods for risk assessment that are used depending on the area of application and objectives. Some common methods include:

       
  • Qualitative Risk Assessment: Here, risks are assessed and prioritized based on criteria such as likelihood, impacts, and controllability. The assessment usually takes place on an ordinal scale (e.g., low, medium, high).
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  • Quantitative Risk Assessment: This method is based on numerical data and statistical procedures to calculate probabilities and potential damage extents. It allows for a more accurate assessment of risks and is particularly prevalent in the financial world.
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  • Scenario Analysis: This method involves developing various scenarios that describe potential risks and their consequences. The scenarios are evaluated in terms of their plausibility and impacts and can serve to raise awareness of potential hazards and to develop countermeasures.

Areas of Application for Risk Assessment

Risk assessments are used in numerous areas to identify potential hazards and respond appropriately. Some examples include:

       
  • Finance: In the financial industry, risk assessments are used to estimate potential losses from credit defaults, market fluctuations, or fraud cases and to take appropriate measures for risk mitigation.
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  • Environment: In environmental protection, risk assessments are used to estimate the impacts of environmental pollution, climate change, or natural disasters on humans and nature and to develop appropriate protective measures.
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  • Security: In the security industry, risk assessments are conducted to assess potential threats from terrorism, cyberattacks, or industrial accidents and to implement suitable protective and control measures.
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  • Healthcare: In the healthcare sector, risk assessments are used to determine the likelihood of disease outbreaks, infections, or medical errors and to develop appropriate prevention and control measures.

Conclusion

Risk assessment is an important part of risk management and a central tool for identifying, analyzing, and assessing risks. It helps decision-makers to estimate potential hazards and their consequences and to take appropriate measures for risk mitigation. Risk assessment is applied in various fields such as finance, the environment, security, and healthcare, thereby contributing to reducing the potential for risk in these areas and promoting sustainable growth.