In a world where organisations are becoming increasingly complex and change is rapid, it is essential to proactively recognise and manage risks. A risk analysis helps with this.
A risk analysis is a structured way of identifying threats, assessing their potential impact and taking appropriate action. But what exactly does a risk analysis entail – and how do you approach it?
What is a risk analysis?
A risk analysis is a process by which you identify potential risks, estimate the likelihood of their occurrence, and what the consequences would be if they did occur. Based on that, you can decide which risks are acceptable, which to mitigate, and which to actively avoid.
In a nutshell, it revolves around three questions:
- What could go wrong?
- How likely is that?
- What are the consequences if it happens?
Why conduct a risk analysis?
A risk analysis is more than a compulsory number. It offers concrete benefits:
- Better decision-making – You make choices based on facts, not gut feelings.
- Preventing damage – Financial, legal, reputation loss or injury can be mitigated or prevented.
- Legal obligation – In some sectors (such as healthcare, IT or construction), a risk analysis is even mandatory.
- Improving processes – It forces you to look critically at weaknesses in your organisation or ways of working.
When is a risk analysis useful?
Actually at every stage of a project or business process. Think about:
- Start of a new project
- Introduction of new technology
- Changes in laws and regulations
- Mergers or reorganisations
- After an incident or near-incident
How do you conduct a risk analysis?
There are several methods, from simple to advanced. A basic method often looks like this:
1. Identify risks
Compile a list of possible risks. Use brainstorming sessions, interviews or historical data to do this.
2. Assess opportunity and impact
For each risk, give a score on probability (how often does it happen?) and impact (how bad is it if it happens?). A scale of 1-5 is often used.
3. Rank the risks
Combine probability × impact into a ‘risk score’. This allows you to quickly see which risks have the highest priority.
4. Define management measures
For each major risk, you determine measures: avoid, reduce, transfer (e.g. via insurance), or accept.
5. Monitor and evaluate
Risks may change. Repeat the analysis regularly, especially in case of major changes.
Risk analysis in practice
Suppose you are working on an IT project. One risk is that sensitive customer data leaks out. The probability of this happening is ‘medium’, the impact ‘high’. This results in a high risk score. Possible measures include encrypting data, additional access security and regular audits.
In conclusion
A risk analysis does not have to be complicated, but it does require structure, cooperation and discipline. By taking this process seriously, you reduce the chances of unpleasant surprises – and build a future-proof organisation.
Want to get started with a risk analysis yourself? Then there are handy templates and tools available, from simple Excel sheets to specialised software. But most importantly: start. Because knowing where you are vulnerable is the first step to becoming stronger.
