Components of Effective Risk Analysis

B.

The probability or likelihood of the event and the financial impact or magnitude of the event must be assessed first.

Duration refers to the length of the event; it is important in order to assess impact but is secondary.

Once the likelihood is determined, the frequency is also important to determine overall impact.

B. Likelihood and impact are the two components that must be primarily assessed in an effective risk analysis.

Risk analysis is an important process in information security management. It is a systematic process of identifying, analyzing, and evaluating potential risks that may affect an organization's operations, assets, or reputation. Effective risk analysis is critical for organizations to make informed decisions about their risk management strategies and allocate resources to reduce or mitigate the identified risks.

Likelihood refers to the probability or chance of a risk event occurring. It is important to assess the likelihood of a risk event because it helps to determine the level of risk associated with the event. For example, if the likelihood of a risk event is high, it means that there is a greater chance that the event will occur, and the potential impact of the event should be considered more seriously.

Impact refers to the extent of the consequences of a risk event if it occurs. The impact of a risk event can be measured in terms of financial loss, damage to reputation, loss of productivity, or other factors. Assessing the impact of a risk event helps to determine the potential severity of the event and the appropriate level of risk management measures needed to mitigate or reduce the risk.

In summary, likelihood and impact are the two primary components that must be assessed in an effective risk analysis. Assessing the likelihood and impact of potential risks helps organizations make informed decisions about their risk management strategies and allocate resources to reduce or mitigate the identified risks.