Assess and manage risk | business.gov.au

5. Evaluate the risk

Risk criteria set a standard to assess risks to your business. To set your risk criteria, state the level and nature of risks that are acceptable or unacceptable in your workplace. Our risk assessment template provides an example of a risk level guide to help you evaluate risks.

To evaluate risk, compare the level of risk for various events against your risk criteria. You should also check if your existing risk management methods are enough to accept the risk.

When to accept risk

Your strategy for managing risk may be more than just deciding whether to accept the risk or not. If your business is part of a bigger supply chain that involves retailers, distributors or primary producers, you can spread the risk across a number of areas.

Sometimes businesses choose to accept risks and not spend any resources on avoiding them. You might decide to accept a level of risk for the following reasons:

• The cost of treatment is much higher than the potential results of the risk.
• The risk level works out to be very low.
• The benefits of taking the risk greatly outweighs the possible damage.