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Why is Risk Analysis Important?

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Risk analysis is the process of identifying and analyzing potential issues that could negatively impact key business initiatives or projects. This process is done in order to help organizations avoid or mitigate those risks.

Risk Analysis Importance

Enterprises and other organizations use risk analysis to:

  • anticipate and reduce the effect of harmful results from adverse events;
  • evaluate whether the potential risks of a project are balanced by its benefits to aid in the decision process when evaluating whether to move forward with the project;
  • plan responses for technology or equipment failure or loss from adverse events, both natural and human-caused; and
  • identify the impact of and prepare for changes in the enterprise environment, including the likelihood of new competitors entering the market or changes to government regulatory policy.

What are the benefits of risk analysis?

Organizations must understand the risks associated with the use of their information systems to effectively and efficiently protect their information assets.

Risk analysis can help an organization improve its security in a number of ways. Depending on the type and extent of the risk analysis, organizations can use the results to help:

  • identify, rate and compare the overall impact of risks to the organization, in terms of both financial and organizational impacts;
  • identify gaps in security and determine the next steps to eliminate the weaknesses and strengthen security;
  • enhance communication and decision-making processes as they relate to information security;
  • improve security policies and procedures and develop cost-effective methods for implementing these information security policies and procedures;
  • put security controls in place to mitigate the most important risks;
  • increase employee awareness about security measures and risks by highlighting best practices during the risk analysis process; and
  • understand the financial impacts of potential security risks.

Done well, risk analysis is an important tool for managing costs associated with risks, as well as for aiding an organization’s decision-making process.

NEBOSH IGC

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