ITPEC IP October 2025 Question 70

Risk assessment — analysing how likely an unwanted event is, here a delayed product launch, and evaluating its impact is assessing a risk.

A risk is an uncertain event that would affect the company's objectives. Risk assessment identifies such events, analyses each one's likelihood and consequences, and evaluates the result against the company's criteria to decide which risks need treatment. Company X did exactly this: it took one possible event (the launch of product Y slipping), estimated how likely it is, and weighed its effect on future performance. Treatment (avoid, reduce, transfer or accept the risk) follows the assessment.

Answer (d)

Why not others:

• •(a) ABC analysis — ranks items such as products by their cumulative share of sales to decide which to control most closely; it does not look at uncertain future events
• •(b) SWOT analysis — lists internal strengths and weaknesses and external opportunities and threats to shape a strategy; it does not analyse the likelihood and impact of one event
• •(c) Environmental assessment — evaluates in advance how a development project, such as a plant or a road, will affect the natural environment

Key rule: A risk is measured on two axes, likelihood and impact; identifying, analysing and evaluating risks on them is risk assessment, and deciding what to do about them is risk treatment.

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