The purposes of risk assessment are to identify hazards and to document remedial action or mitigating actions for these hazards.
Risk assessment is, as the term implies, a process designed to determine whether the subject under assessment could raise or be impacted by an external event and what reasonable precautions can be taken to limit or negate the effect of this event. Risks will vary depending on the object of the assessment, but at the highest risk end could include risk of personal injury, breach of contract due to late delivery or missing functionality, and at the lower end, missing internal project deadlines due to staff holidays and sickness.
For each risk identified, a coping strategy is developed. This strategy may at best eliminate the risk entirely, but more commonly will mitigate or reduce the impact of the risk should it materialise. The strategy could be to allow more money in the development budget to offset extra cost due to unforeseen complexity, it could be to implement extra controls or protection for end user safety.
Risk assessment is extremely important in commercial activities, as many of the potential hazards will have the possibility of causing severe financial loss or severe damage to reputation, both of which can be fatal to a company trading with a recognised reputation for its name and its products.
A good source for understanding risk assessment and the need to use them is provided at:
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