Question

Risk analysis is a critical component of risk management what are two components of risk that must be analyzed. Why are they important

Answer 1

The two components of a risk that needs to be analyzed would be:-

1. How likely is a risk bound to occur

Which we can attribute as being an important component of risk analysis. Just understanding the probability of a risk occurrence allows us to better understand the severity of the risk and classify it as being a high risk or a low-risk factor. We can say that the probability of risk is important for analysis for the reason that we can then prepare countermeasures to mitigate it successfully.

2. What would be the impact of the risk

Which is the level/severity of the impact of risk. If we have classified the risk to be unavoidable and having a high possibility, we have to be able to measure the impact it would have on our system, how it would affect our system and to what extent do we need to maintain the damage control situation.

Both these values allow us to understand the nature, severity and if the risk is internal or external as well as make sure we can mitigate it accordingly.