Risk Analysis in Business

An experienced banking professional, Julio M. Herrera Velutini is the chairman of a global finance entity based in Puerto Rico. A fundamental part of Julio Herrera Velutini’s management model includes the use of risk analysis to determine the business’ economic viability.

At its core, risk analysis determines two things: the probability of a calamitous event occurring and the impact the event will have on the business.

For businesses, the purpose of conducting risk analysis is to identify possible negative events so that officials can take proactive measures to mitigate potential losses. The analysis can either be quantitative or qualitative.

Quantitative risk analysis is more complex. Here, risk analysts calculate the numerical likelihood of various negative events together with their likely negative impacts. Qualitative risk analysis is relatively less complex and more widely used by businesses. Here, no numerical probabilities are calculated. Business owners simply identify the different threats they face, list their possible impacts, and brainstorm countermeasures to mitigate the effects of these negative events. An experienced banking professional, Julio M. Herrera Velutini is the chairman of a global finance entity based in Puerto Rico. A fundamental part of Julio Herrera Velutini’s management model includes the use of risk analysis to determine the business’ economic viability.

At its core, risk analysis determines two things: the probability of a calamitous event occurring and the impact the event will have on the business.

For businesses, the purpose of conducting risk analysis is to identify possible negative events so that officials can take proactive measures to mitigate potential losses. The analysis can either be quantitative or qualitative.

Quantitative risk analysis is more complex. Here, risk analysts calculate the numerical likelihood of various negative events together with their likely negative impacts. Qualitative risk analysis is relatively less complex and more widely used by businesses. Here, no numerical probabilities are calculated. Business owners simply identify the different threats they face, list their possible impacts, and brainstorm countermeasures to mitigate the effects of these negative events.