The risk management process includes identifying risks, analyzing and responding to risks, and then escorting and controlling throughout the project life cycle. The methodology used at each stage of the risk management process is different. The question here is about the most important two stages, which are identifying and analyzing risks, and what is the difference in the methodology in these two stages?
Risk analysis is a sequence of planning of risk management, risk analysis, risk identification and risk quantification. Risk Management incorporates risk identification and risk quantification. Risk quantification is a process to evaluate the identified risk.
Risk identification is usually conducted qualitatively because it's difficult to anticipate accurately and quantitatively something that may or may not happen. The purpose is to identify as many risks that may affect the business or supply chain. Common methods used are interviewing the panel of industrial experts to identify risks, brainstorming, checklist to prepare Ishikawa diagram. In Japanese companies in my research, they involved top down employees in this stage and ideas are presented anonymously. Production, quality, and procurement managers will screen the ideas.
Risk analysis is usually conducted quantitatively especially due to customers' pressure or ISO 16949 certification requirement. The purpose is to prioritize risks based on likelihood of occurrence and severity of impact. Common methods used in industries are Failure Mode and Effect Analysis (FMEA), risk matrix but in academia, there are plenty of mathematical modeling and decision science techniques. Some used Bayesian network, Fault Tree Analysis, simulation etc.
You may want to check the following paper which will help you in this regard:
Systems and methods for user identity verification and risk analysis using available social and personal dataA Sanin, WD Clerico, R Aberman, E Stern… - US Patent …, 2014 - Google Patents
Dear Kassem, I hope the below explanation will be useful:
Risk identification is the act of identifying negative and positive risks that may impact an objective. Some common methods of risk identification are: brainstorming, flowchart method, SWOT analysis, risk questionnaires and risk surveys. However, risk analyzing is the process of identifying and analyzing potential issues that could negatively impact key business initiatives.
Kind regards,
Identification is aimed at detecting dangerous and harmful factors that create risks. The next operation after identification is a risk analysis. Dangers and harmful factors are everywhere, therefore risks are present in any activity. You do not see the microbe, but it exists. The task is to identify and analyze the risk.
Speaking more practical,
Risk Identification answers the questions:
- What can happen?
- When and where?
- How and why?
Risk analysis includes the identification of existing controls and consequently the determination of Likelihood and Consequences in order to determine the Level of Risk (calculation of the Riskiness).
The identification of existing controls and the determination of the Level of Risk, leads in to the next stage - Risk Evaluation - where risk comparison against criteria and prioritisation of risks take place in order to decide whether or not measures (more controls) will be implemented.
As noted by some of the respondents, risk identification is a qualitative assessment while risk analysis is quantitative and incorporates various statistical or mathematical methods. The attached paper is an example of a risk assessment performed for non-GEO mobile satellite systems. It is tied to a risk taxonomy which identifies all areas of a project where trouble can occur. Once this is done, analysts can assess the potential impact of problems in terms of cost and schedule, select distributions and aggregate them using Monte Carlo simulation or, in rare cases, sum them analytically.
Risk analysis is a sequence of planning of risk management, risk analysis, risk identification and risk quantification. Risk Management incorporates risk identification and risk quantification. Risk quantification is a process to evaluate the identified risk.
Risk identification is just listing the risk factors. The analysis goes much deeper.
THE RISK ANALYSIS IS A COMPLETE PROCESS THAT INCLUDES THE IDENTIFICATION OF POSSIBLE RISKS (IS THE FIRST STEP), THE EVALUATION OF EACH RISK IDENTIFIED, THE CONTINGENCY MEASURES FOR IMPORTANT RISKS AND FINALLY THE RISK MONITORING AND CONTROL. THE IDENTIFICATION IS ONLY THE FIRST STEP, AND IT CONSISTS OF IDENTIFYING ALL THE POSSIBLE RISKS USING SOME TECHNIQUES LIKE BRAINSTORMING
Risk analysis - systematic use of information to idetify sources and to estimate the risk. It provides a basis for risk evaluation, risk treatment and risk acceptence. Information can include historical data, theoretical analysis, informed opinions, and the concerns os stakeholders. These process is part of risk assessment.
Risk identification - process to find, list and characterize sources.
Sources - item or activity having a potential for a consequence.
All above is in a context of security risk.
Source: ISO EC 73 Risk management - Vocabulary.
The purpose of identifying risks is to identify various kinds of risks. At this stage, mainly statistical and search methods are used. Risk analysis aims to establish the most significant risks. It uses methods of expert assessments, decision support methods, optimization methods, a systematic approach.
Chung Tin Fah according to ISO 31000 the sequence of the Risk Management process is:
- Establishing the context
- Risk assessment (risk identification, risk analysis, risk evaluation)
- Risk treatment
- All the above combined by Communication & consultation and Monitoring & review
According to Institute of Risk Management model, Risk Analysis incorporates risk identification, risk description and risk estimation (which is the risk quantification). According to this model, Risk Analysis is followed by Risk Evaluation.
In any case, Risk Evaluation is NOT the quantification of Risk but the comparison against criteria and prioritisation of risks in order to decide whether or not additional measures (more controls) will be implemented. Risk quantification is incorporated in Risk Analysis in all models.
Risk analysis is a process given by several different methods, according to the variables: analyzed activity, analyzed population, types of risks involved, existing epidemiological data. From the analysis of the risk and a deep systematic analysis comes the identification of the risks found.
Take for example the event of crossing a road:
You identify the risk of being hit by a vehicle, of falling during the crossing, of being fined by a policemen. That's identification.
What could cause each of the above? What are the probabilities of each? How can you prevent them ?(e.g. look around you before you start).? What is the efficiency of the prevention. What are the consequences ? That's analysis
The risk management phase begins with revealing procedures of risk factors. In most cases using an expert evaluation method. The quality of the work to be performed at this stage depends on the information provided by the procedure, the level of qualification of the experts and the level of risk culture of the respondents. As a result of processing the identified risk factors by different methods (mental assault, Delphi method), the management risks are identified according to the ranks assigned to them. The analysis includes not only quantitative risk assessment, but also low-rank risk analysis, which involves developing management measures in place based on experience from previous years. As for critical risks, it is necessary to quantify them using the methods that the risk management service will be able to obtain. It is mainly assessed the Financial risks, which risk factors are identified by expert assessment. Thus identifying and quantifying risks analysis are interrelated procedures for critical (medium to high) risks.
Juan Manuel Izar According to international standards, what you refer as RISK ANALYSIS is the RISK MANAGEMENT process which, among others, include the Risk Analysis (see my answers above).
There is a significant difference in methodology between risk identification and risk analysis. Risk identification depends on the identification methodologies such as brainstorming, checklists and lessons learned and determining the probability of internal and external risks for the project and arranging them according to their probability and degree of impact. After completing the identification of potential risk factors in the project, the process of risk analysis begins using different methods and methodologies such as SWAT or structural equation modelling method or Probability Impact Matrix (PIM) or the relative importance index (RII). Usually, the analysis depends on conducting a questionnaire or interviews and obtaining specific data to carry out its analysis. Finally, identifying and analyzing risks is considered part of the continuous risk management process carried out during the project life cycle.
Dear Kassem,
When talking about Occupational Risk Management, we seek to directly address two situations:
1- the search and identification of the risks encountered, and
2- its analysis, which is divided into two phases, qualitative analysis, where the risk must be qualified within the Risk Table: Physical, Chemical, Biological, Ergonomic and so-called Accidents.
After this phase, we have to quantify the risks found and qualified.
In this way we find the DIFFERENCE between Risk Identification and Risk Analysis.
I hope I have helped in your studies.
Dear,
His study deals with different factors that end up being interconnected: Risk management, material and human risk factors, mitigation or reduction of surpluses (time and cost). Thus it focuses on a decision-making process, as it must have to consider the complex items of organizational changes caused by technology and the globalization of the economy. So I recommend reading about Decision Making based on the AHP Method (Thomas Saaty) which will help you a lot.
Please read the article: http://ww.casopis-gradjevinar.hr/assets/Uploads/JCE_67_2015_4_1_1179_EN2.pdf
ISO 31000 provides the guidelines on risk management and describes the process of managing risks, that includes risk assessment, treatment and monitoring. Risk assessment can be divided in the phases of risk identification, analysis and evaluation. Risk identification is generating a comprehensive list of risks that can interfere with the organization objectives. Risk analysis is to understand the risk, its, sources, causes and consequences. Risk evaluation is to measure the risk level, in order to decide the treatment. There are many methods for performing each of these phases. ISO 31010 describe about thirty of these methods, and provides guidance on selecting the most appropriate to each case.
The method of identifying risk and analyzing risk is different, Identifying risk deals with the tools like HAZOP, HAZID, What if analysis, FMEA and checklist method for identifying potential hazard for a system, process and equipment. it is fully qualitative method.
whereas analyzing risk means quantifying the risk and comparing to standard value to bring it to tolerable range. There are different method of going it like Event tree analysis, FMECA, calculation of individual and societal risk by using probit equation etc, and comparing and indication the calculated risk on ALARP and F-N curve.
Risk identify is just that: a list of plausible risks that the system face. Risk analysis should follow a methodological aproaches and include a semi-quantitative evaluation of each risk (probability and consequence). The identification of risks is part of the risk analysis. Risk analysis is more than risk identification though.
- Badges
- Science method
- Similar topics
- Methodology