A risk assessment is a thorough look at your workplace to identify those things, situations, processes, etc. that may cause harm, particularly to people. After identification is made, you analyze and evaluate how likely and severe the risk is. When this determination is made, you can next, decide what measures should be in place to effectively eliminate or control the harm from happening.
Risk assessment is a term used to describe the overall process or method where you:
- Identify hazards and risk factors that have the potential to cause harm (hazard identification).
- Analyze and evaluate the risk associated with that hazard (risk analysis, and risk evaluation).
- Determine appropriate ways to eliminate the hazard, or control the risk when the hazard cannot be eliminated (risk control).
How a risk assessment is conducted varies widely depending on the risks unique to the type of business, the industry that business is in and the compliance rules applied to that given business or industry. However, there are five general steps that companies can follow regardless of their business type or industry.
Identify the Hazards
The first step in a risk assessment is to identify any potential hazards that, if they were to occur, would negatively influence the organization’s ability to conduct business. Potential hazards that could be considered or identified during risk assessment include natural disasters, utility outages, cyberattacks and power failure.
Determine What, or Who, could be Harmed
After the hazards are identified, the next step is to determine which business assets would be negatively influenced if the risk came to fruition. Business assets deemed at risk to these hazards can include critical infrastructure, IT systems, business operations, company reputation and even employee safety.
Evaluate Risks and Develop Control Measures
A risk analysis can help identify how hazards will impact business assets and the measures that can be put into place to minimize or eliminate the effect of these hazards on business assets. Potential hazards include property damage, business interruption, financial loss and legal penalties.
Record the Findings
The risk assessment findings should be recorded by the company and filed as easily accessible, official documents. The records should include details on potential hazards, their associated risks and plans to prevent the hazards.
Review and Update the Risk Assessment Regularly
Potential hazards, risks and their resulting controls can change rapidly in a modern business environment. It is important for companies to update their risk assessments regularly to adapt to these changes.