Different people will have different views of the impact of a particular risk – what may be a small risk for one person may destroy the livelihood of someone else. The first stage of a risk analysis is to identify threats. The next step is to work out the likelihood of the threat being realized and to assess its impact. One approach to this is to make the best estimation of the probability of the event occurring, and to multiply this by the amount it will cost to set things right if it happens. This gives a value for the risk.

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