What is the purpose of a risk assessment?
In finance, it’s to ensure that management understands all of the issues that pertain to a specific action. Knowing what the possible risks are helps them to figure out how much the action could cost. Examples: If a highway is going to be built next to a house, the value of the property could go down. If interest rates are dropping, that’s something that will affect the value of the investment. If a company relies on one vendor, and that vendor is having cash flow problems, that’s a good risk to know about.
