What is Risk Analysis?
Risk analysis involves the quantification of unknowns and/or uncertainties with the purpose of determining the effect on end result. The outcome of the process entails making the appropriate decisions based on the quantitative and qualitative analysis.
Risk analysis application and its management is indigenous to many industries. The following are examples of its applicability.
During project development, analysts might conduct a risk assessment. This stage searches for the effects of both positive and negative possibilities that could occur. Thus affected the objective of the project.
In healthcare, risk analysis is used to ensure organizations are compliant with the HIPAA (Health Insurance Portability and Accountability Act) requirements. In addition, risk assessment may find where an organization jeopardizing PHI (protected health information).
Online risk assessments can be greatly beneficial for healthcare organizations as they work to keep sensitive data secure. The first step toward addressing an organization’s website vulnerabilities is to conduct an online risk assessment, preferably by a third party. In conjunction, a website should have a complete audit, particularly if a website designed by the hospital’s own IT department has never experienced an audit.
Risk analysis in capital investment serves the intent of plausibility of business acquisitions, new products, plant upgrades, and more. It is his/her evaluation of risk to help the executive make key capital investment decisions. This process incorporates the disciplines of finance, economics, accounting, as well as risk analysis.
This type of risk analysis examines the refers to the unpredictable nature of anticipated investments, the fluctuating stock markets, and the current and future economic conditions.
IT risk analysis is a crucial part of any IT department’s job as it helps to identify and manage potential problems that could affect an organization’s IT infrastructure. In order to perform an IT risk analysis, IT professionals must identify any potential threats to their organization and then estimate the likelihood they will occur.
There are different types of threats that can affect IT infrastructure. For a risk analysis, you will need to list all of these possible types of threats. These can include:
- Technical Threats — disruption caused by technological advances or failures.
- Structural Threats — anything related to the building that houses the IT infrastructure that could cause it harm.
- Natural Threats — weather and natural disasters such as earthquakes, tornadoes, and floods.
Cyber Security Risk
This could apply to most industries. The risk analyst in this position defines, documents, assesses, and reduces risk related to the operational activities of the company. Your analysis could involve research into laws and regulations, determine the effectiveness of cybersecurity controls, assess vendor offerings, review and edit compliance policies, as well as develop policies and procedures.
Additional responsibilities may include the communication of results of analyses performed within the department. This may require presentations to at all levels within the organization including senior management. You may also need to assist in the facilitation of meetings in which you discuss your findings with management.
The core business of a bank is to manage risk and provide a return to shareholders in line with the accepted risk profile. Some financial experts opine that if the banks had attended to risk management, then there would not have been the flood on the U.S. market of cheap short-term interest rate mortgages. These led to the highly publicized housing bubble and the ultimate wave of personal bankruptcies and home foreclosures.
The regulations that emerged from the global financial crisis and the resulting levied fines prompted a wave of change in risk functions. Banking firms are now adopting fraud and risk analysis solutions to understand their customers’ needs and overcome hurdles in the banking industry.
The leader in social media posted a job seeking a Risk Assessment Analyst. A technically savvy person will be responsible for analyzing risks and make determinations based on his/her assessment. Another job for a Business Risk Analyst focuses on advertising and its revenue.
Degree in Risk Analysis
Further reading is available in our article titled- What Classes will I take in a Risk Analysis Degree? As you see, there are many areas of specialization in this field. These provide the opportunity to select one that suits your ambition to work as a risk analyst within a certain industry.