Risk Assessment Lifecycle Flowchart

Risk Assessment enables organizations proactively identify, evaluate, and manage potential risks that could impact their operations, assets, and objectives.

This Risk Assessment Lifecycle Flowchart provides a visual representation of the core stages and steps involved in the risk assessment process, offering a clear start to end roadmap for effective risk management and guide organizations in making informed decisions.

Click on a Risk Assessment stage in the flowchart to view additional description on what’s involved in that stage.

RID	Risk Assessment	Stage	Description
1	Define the Scope of Risk Assessment	Input	By defining the scope of the risk assessment, organizations can ensure that the assessment process is targeted, precise, efficient, and tailored to their specific needs. It provides clarity and direction for the assessment activities and creates a sustainable foundation for the subsequent stages of risk assessment, such as risk identification, analysis, and evaluation.
2	Gather historical data, industry reports, and expert opinions	Input	By gathering historical data, industry reports, and expert opinions, organizations can enhance their understanding of potential risks and their likelihood and impact. This step also serves as a foundation for the subsequent stages of risk assessment, such as risk identification, analysis, and evaluation. It helps organizations make informed decisions, prioritize their risk management efforts, and develop effective strategies to mitigate and respond to identified risks.
3	Conduct brainstorming sessions with key stakeholders	Input	By conducting brainstorming sessions with key stakeholders, organizations can leverage the collective intelligence and diverse perspectives of their stakeholders to identify a comprehensive range of risks. This collaborative approach fosters engagement, ownership, and commitment to risk management efforts. It sets the foundation for the subsequent stages of risk assessment, enabling organizations to effectively analyze, evaluate, and address identified risks.
4	Identify Potential Risks	Process	Conduct brainstorming sessions, review historical data, and analyze industry trends involving key stakeholders from production, supply chain, and finance departments to identify potential risks such as supply chain disruptions, equipment failure, regulatory compliance, and cybersecurity threats.
5	Categorize Risks	Process	Group identified risks into relevant categories, such as operational, financial, legal, technology, cybersecurity or reputational risks.
6	Assess Likelihood	Process	Evaluate the probability or likelihood of each identified risk occurring by analyzing historical data, trends, expert opinions, or statistical analysis to evaluate the likelihood of each identified risk occurring. Determine that supply chain disruptions and equipment failure have moderate likelihood, while cybersecurity threats have a higher likelihood.
7	Likelihood Assessment: Low, Medium, High?	Decision	By categorizing risks into Low, Medium, or High likelihood, organizations can focus their attention on managing risks based on their perceived likelihood and potential impact on their operations, projects, or objectives.
8	Assess Impact	Process	Assess the potential impact or consequences of each identified risk on business objectives, assets, operations, and stakeholders. Identify the potential supply chain disruptions and equipment failures could have a significant impact on production and financial performance, and the cybersecurity threats that could lead to data breaches and reputational damage.
9	Impact Assessment: Low, Medium, High?	Decision	By categorizing risks into Low, Medium, or High impact, organizations can focus on addressing and managing risks based on their potential severity and the importance of the affected objectives, assets, or operations.
10	Assign Risk Ratings	Process	Assign a risk rating to each identified risk based on the combination of likelihood and impact assessments. Use a risk matrix or numerical scale to categorize risks as high, medium, or low.
11	Risk Rating: Low, Medium, High	Output	By utilizing Risk Ratings, organizations can establish a common understanding and language around risk levels, facilitating effective communication and informed decision-making in managing and addressing risks within the organization.
12	Prioritize Risks	Process	Prioritize risks based on their ratings, focusing on high-risk areas that require immediate attention and mitigation efforts.
13	Assess Existing Controls	Process	Evaluate the effectiveness of existing controls or mitigation measures in place such as backup suppliers, maintenance schedules, and cybersecurity measures to address identified risks, gaps or deficiencies.
14	Control Evaluation: Gaps or Deficiencies	Output	By evaluating controls for gaps or deficiencies, organizations can identify areas where improvements or corrective actions are required to strengthen the overall risk management framework. This evaluation helps ensure that controls are aligned with the organization's risk appetite and objectives.
15	Determine Risk Tolerance	Process	Define the organization's risk appetite or tolerance level, considering factors such as regulatory requirements, industry standards, the organization's financial capacity and business objectives. Determine if the organization has a low tolerance for risks that could significantly impact production or financial stability.
16	Risk Tolerance Level: Low, Medium, High	Output	The Risk Tolerance Level guides organizations in determining appropriate risk management strategies, resource allocation, and decision-making frameworks. It ensures that risk management efforts align with the organization's risk appetite and overall objectives.
17	Update Risk Register	Process	Document all identified risks, their ratings, and relevant details in the organization's risk register or risk management system. Include details such as the risk description, likelihood, impact, risk rating, existing controls, and any recommended actions for mitigation.
18	Updated Risk Register	Output	The Risk Register serves as a living document that is regularly updated throughout the risk management lifecycle. It serves as a valuable reference tool to monitor, review, and respond to risks, ultimately contributing to the organization's ability to identify, assess, and manage risks effectively.
19	Completed Risk Identification and Assessment Process	Output	By achieving a completed risk identification and assessment process, the organization gains a holistic view of its risks, enhances risk awareness, and establishes a foundation for developing effective risk management strategies. It also helps the organization proactively respond to potential threats, seize opportunities, and foster a culture of risk-awareness and resilience.