Risk Assessment

What is a Risk Assessment?

A risk assessment provides organizations with the basis for the prioritization of investments in disaster risk reduction and the improvement of capabilities in a manner tailored to local conditions, needs, and preferences. 

By identifying and assessing the likelihood and consequences of potentially disastrous events, organizations can better prioritize resources and take preparedness actions.

Risk Assessment Matrix

A Risk Assessment Matrix helps organizations to analyze potential consequences to their operations based on the severity and likelihood of hazard impacts. 

Step 1: Identify Hazard Risk

Hazard risk can be understood by analyzing the losses of past disasters.

Start by thinking about what hazards have impacted your community and your organization in the past, and which you think are likely to impact you in the future.

What are Hazards?

Hazards are “a dangerous phenomenon, substance, human activity or condition that may cause loss of life, injury or other health impacts, property damage, loss of livelihoods and services, social and economic disruption, or environmental damage.” - IFRC PAPE for DRR

Hazards do not have to turn into disasters. Knowing your risks can help you reduce your vulnerability to hazards and strengthen the resilience of your critical resources by taking the right preparedness steps

Step 2: Identify Critical Resources

Critical resources are the assets your organization relies on that impact its business operations and its ability to recover in the event of a disaster. Think about which resources your company can not function without.

Critical resources could include:

  • Physical (buildings, equipment, infrastructure, inventory)
  • Human (staff)
  • Intellectual (partnerships, processes, data)
  • Financial (cash, credit)

Step 3: Risk Analysis

To assess your risk, there are three main parameters to take into account:

  • The consequences to each resource if the risk event happens
  • The severity of the impact of the risk event if it happens
  • The likelihood of the risk event to happen

For consequences, think specifically about what damage might occur to each resource if impacted by a particular hazard, based on severity level.

Assess the severity and likelihood parameters from 1 to 5, with 5 being the highest. The combination of likelihood and severity will calculate your risk.

risk assessment matrix

Repeat this exercise for each hazard you identified in Step 1, to ensure you have fully accounted for potential impacts to your organization.

Prioritization Matrix

A Prioritization Matrix helps organizations to prioritize their risks and encourages them to take the necessary actions to help reduce their hazard risks and build resilience.

Step 4: Prioritization & Action

In the Priority Matrix below, assign each resource to a square based on the level of impact (the consequences you've identified) to each resource, and based on the likelihood of such an occurrence.

For example, if your organization is impacted by a building fire, the severity to physical resource (the building) would be high (perhaps a 4), and the likelihood also high (also a 4). A 4 in each places this risk in the red zone, identifying it as a critical area for mitigation activities.

Likelihood

 

 

 

Severity

risk matrix