A risk assessment is a careful examination of what could cause harm to people while taking part in a project. It aims to identify whether enough precautions, or ‘control measures,’ are in place, or whether further action is required to minimize, or eliminate, the level of risk identified.
In the business world, risk assessment in a geographic context has to do with mitigating the risk for a company to conduct business in a specific geographic area. What events might prevent that business from succeeding? An example would be oil rigs in the Gulf of Mexico. There is a significant risk that a hurricane will come through from the Atlantic Ocean and disrupt business.
The owner of a retail location most likely has protocols in place to mitigate the risk to their store in a high-risk neighborhood such as security cameras, expensive items under lock and key and insurance policies.
How did the business owner decide on these safeguards? It all comes down to location intelligence and analytics. The business owner completed a risk assessment which consists of five types of risk: strategic, compliance, operational, financial, and reputational. Each business mitigates these risks differently. In our store example, the primary dangers this business owner is looking to reduce with the bulletproof glass and video cameras are the financial and operational risks.
If this store were opened in a less dangerous neighborhood, the business would look a lot different. Assessing the risk potential and the impact of each type of risk is a significant part of mitigating the risks that could exist for your business. You would expect the oil rig in the Gulf of Mexico to have hurricane insurance. But that oil rig might not plan for an earthquake or tsunami.
Risk assessment in a geographic sense is: making sure the business is protected from any negative externalities that could arise based on the location of the company. Each business, each site, will have different needs and different risks to mitigate.
For more information on location-based risk assessment contact HERE Mapping Resources at 888-848-4436.