In business, risk is the possibility of future loss because of uncertainties about a company's processes and goals. For example, a company could be unsure whether a raw material will arrive at its factory in time to meet an urgent order. Risk analysis uses analytical models to assess such risk to help managers make decisions in the face of uncertainty. A risk analysis report is a guide to the assumptions and conclusions of the models.
- Skill level:
- Moderately Challenging
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Structure a risk analysis report with subheadings that address each point separately. As a minimum, a report's structure should include a summary, an introduction to the risk, the assumptions of the model, the data used and the conclusions.
Write a risk analysis report to suit the intended readers. Do not bore or confuse readers with technical details they may be unable to grasp. Ensure a report is clear, understandable and explanatory.
Do not use too many statistics in a risk analysis report. Risk analysis can produce a lot of statistics but these are not always relevant. Use only those that apply to the analytical model and the uncertainties.
Use graphs in a risk analysis report. Graphs are a visual representation of uncertainty and help readers understand any risks. Label the graphs and provide explanatory notes.
Include guidance about costs, profit margins, risk contingencies and budgets in a risk analysis report. These issues help provide an answer to uncertainties and suggest a conclusion.
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