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Risk Analysis is an aspect of decision making in which the likelihood of a negative outcome is weighed against the statistical probability of the event not occuring or there being a positive outcome.The technique is used to identify and assess factors that may jeopardize the success of a project or achieving a goal. This technique also helps define preventive measures to reduce the probability of these factors from occurring and identify countermeasures to successfully deal with these constraints when they develop.
Risk analysis has a role in a number of fields:
- Risk analysis (engineering)
- Probabilistic risk assessment, an engineering safety analysis
- Risk analysis (Business)
‘Risk analysis’ is employed in its broadest sense to include:
- Risk assessment
- involves identifying sources of potential harm, assessing the likelihood that harm will occur and the consequences if harm does occur.
- Risk perception
- There is a subjective aspect to judging risk. A gambler for example being more likely to be a risk taker
- Risk management
- evaluates which risks identified in the risk assessment process require management and selects and implements the plans or actions that are required to ensure that those risks are controlled.
- Risk communication
- involves an interactive dialogue between stakeholders and risk assessors and risk managers which actively informs the other processes.
Risk analysis = risk assessment + risk management + risk communication.