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The fundamental process of identifying, analyzing, and evaluating risk is necessary in providing those responsible for making business decision an understanding of the risk. This understanding allows decisions to be made regarding whether the identified risk is tolerable, and what control measures are most appropriate. Ultimately, the “output” of risk assessment is an “input” to the decision‐making processes.

The following sections describe the sequence of components that take place within a risk assessment process. This is illustrated in Figure 3.3.

Figure 3.3 Simplified steps of a risk assessment.