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Risk Analysis

What Does Risk Analysis Mean?

Risk analysis is the review of the risks associated with a particular event or action. It is applied to projects, information technology, security issues and any action where risks may be analyzed on a quantitative and qualitative basis. Risk analysis is a component of risk management.


Risks are part of every IT project and business endeavor. As such, risk analysis should occur on a recurring basis and be updated to accommodate new potential threats. Strategic risk analysis minimizes future risk probability and damage.

Techopedia Explains Risk Analysis

The risk management process involves a few key steps. First, potential threats are identified. For example, risks are associated with individuals using a computer either incorrectly or inappropriately, which creates security risks. Risks are also related to projects that are not completed in a timely manner, resulting in significant costs.

Next, quantitative and/or qualitative risk analysis is applied to study identified risks. Quantitative risk analysis measures expected risk probability to forecast estimated financial losses from potential risks. Qualitative risk analysis does not use numbers but reviews threats, and determines and establishes risk mitigation methods and solutions.

A contingency plan may be used during risk analysis. If a risk is presented, contingency plans help minimize damage.


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