How do risk assessment and risk management differ?

Risk assessment and risk management play distinct yet complementary roles in the process of identifying and mitigating risks within an organization.

The primary function of risk assessment is to identify, analyze, and evaluate risks that an organization may face. This involves determining the likelihood and potential impact of various risks, allowing organizations to understand their vulnerabilities and prioritize them. It is essentially the initial stage of risk analysis where data is gathered and evaluated, focusing on what risks exist and the extent of their potential effects on the business.

In contrast, risk management takes the findings from risk assessment and involves the development and implementation of strategies to mitigate those identified risks. This includes creating policies, procedures, and controls to reduce the likelihood of risk occurrence or minimize their impact. Risk management encompasses the ongoing process of monitoring and reassessing risks and the effectiveness of strategies to ensure that the organization remains protected over time.

Thus, the statement in the correct choice reflects the essence of both processes: risk assessment evaluates risks, while risk management is concerned with putting strategies into action to address those risks effectively. This differentiation is key for organizations to effectively navigate the landscape of potential threats they face.