A practical guide to risk assessment

A practical guide to risk assessment*
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How principles-based risk assessment enables organizations to take the right risks

Today’s business world is constantly changing — its unpredictable, volatile, and seems to become more complex every day. By its very nature, it is fraught with risk.

Risk assessment provides a mechanism for identifying which risks represent opportunities and which represent potential pitfalls. Done right, a risk assessment gives organizations a clear view of variables to which they may be exposed, whether internal or external, retrospective or forward-looking.

For risk assessments to yield meaningful results, certain key principles must be considered. A risk assessment should begin and end with specific business objectives that are anchored in key value drivers. These objectives provide the basis for measuring the impact and probability of risk ratings.

Organizations that vigorously interpret the results of their risk assessment process set a foundation for establishing an effective enterprise risk management (ERM) program and are better positioned to capitalize on opportunities as they arise.