What is a Risk Assessment?
A risk assessment is a systematic process for identifying potential threats to your organization, evaluating how likely they are to occur, and understanding what impact they would have. In the context of business continuity, risk assessment helps you understand what could go wrong and prepare accordingly.
The Risk Assessment Process
Identify Risks
Start by brainstorming all potential threats to your business. Consider both internal and external risks across multiple categories.
Natural Hazards
- • Floods, earthquakes, hurricanes
- • Severe weather events
- • Pandemics
Technology Risks
- • Cyber attacks, ransomware
- • System failures
- • Data breaches
Human Risks
- • Key person dependency
- • Labor disputes
- • Human error
Supply Chain
- • Vendor failure
- • Supply disruption
- • Logistics problems
Assess Likelihood
For each identified risk, estimate how likely it is to occur. Use a consistent scale:
Assess Impact
Evaluate the potential impact if the risk materializes. Consider financial, operational, reputational, and regulatory impacts.
Calculate Risk Score
Multiply Likelihood × Impact to get a risk score. This helps prioritize which risks need the most attention.
Risk Score = Likelihood × Impact
Risk Treatment Strategies
Once you've assessed your risks, decide how to address them using these four strategies:
Avoid
Eliminate the risk entirely by not engaging in the activity that creates it.
Transfer
Shift the risk to a third party through insurance, contracts, or outsourcing.
Mitigate
Implement controls to reduce likelihood or impact of the risk.
Accept
Acknowledge the risk and prepare to deal with consequences if it occurs.
Streamline Your Risk Assessment
InstaBCM includes a built-in risk register with heat maps, scoring, and treatment tracking.
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