What is Risk Assessment?

Risk assessment is a universal requirement across compliance frameworks and serves as the foundation for all security decision-making. The process typically involves several stages: asset identification (what needs protection), threat identification (what could go wrong), vulnerability identification (what weaknesses exist), likelihood assessment (how probable is the event), impact assessment (how severe would the consequences be), and risk evaluation (does the risk exceed acceptable thresholds). Organizations can choose from qualitative methods (using scales like High/Medium/Low), quantitative methods (assigning monetary values), or semi-quantitative approaches. ISO 27001 requires a documented risk assessment methodology and a risk register. SOC 2 auditors verify that risk assessments are conducted periodically and that identified risks are addressed through appropriate controls. HIPAA specifically mandates risk analysis as the first step in Security Rule compliance. The output of a risk assessment directly informs control selection, resource allocation, and cyber insurance decisions.