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risk analysis Finance Definition

The process of determining whether an investment or business decision is worth the financial risk involved. Risk analysis for securities portfolios involves using a variety of statistical techniques and other methods to judge how steep losses could be if certain events occur. Companies conduct risk analysis of their information technology systems, building in safety, employee safety, and data safety costs. Numerous systems are used to conduct risk analysis.

Risk Analysis Hacker Definition

In an IT security context, it is the process of determining the actual likelihood or risk that an organization’s security will be breached, and what kind of material or immaterial losses will potentially result from such a security breach. Immaterial losses typically describe hard-to-measure losses such as loss of reputation. An example for such a loss would be a successful attack on a bank or financial institution in which data privacy was violated. The risk is typically expressed as a financial risk and used to budget for investments in IT security technology, personnel, and processes; it is similar to insuring against a natural disaster or a theft.

See Also: Risk.