What is the purpose of a risk assessment? – Probability
When determining ‘what is the purpose of a risk assessment?’ it is important to understand what it is. A risk assessment is a mathematical probability that is basically used for a ‘what if’ situation to determine the possibilities of certain accidents, damage, or loss. This can pertain to human health or possibility of injury or fatality; environmental risks to humans, property, or animals; possibility of damage to property or humans, as well as many others. Fair warning, the words possibility and probability will be used quite often to explain risk assessment but in determining the risk of repetitively overusing certain words, it has been determined that the probability of being able to explain the possibilities of risk assessment without them will outweigh the repetitive redundancy of said words. Assuming that last sentence managed to make sense, let’s get on with it.
What is the Purpose of a Risk Assessment? – Possibility
To further examine the question ‘what is the purpose of a risk assessment?’ we should look at some examples of its use. A risk assessment can be used by insurance companies to determine if an individual is insurable. This can be determined for all types of insurance by determining several factors. For instance, statistics can be compiled based on age for driving a vehicle, and then statistics can be searched to determine how many wrecks occur in a certain type of vehicle. By using all these statistics an insurance company can determine their rates for an individual, hence why a teenager driving a sports car becomes ridiculously expensive. Teenagers have a tendency to get in more wrecks and be more careless, while similar statistics are shown for sports cars being in wrecks due to their power, the combination of these statistics will give an insurance company a probability of the possibility of wrecks and what the damage may end up costing them. After determining all this data they can configure their rates to cover the possible costs that may accrue. Risk assessment is all a game of ‘what ifs’ though it is based on scientific data to create mathematical probability.
What is the Purpose of a Risk Assessment? – Statistics Based Data
When determining the purpose of a risk assessment we can look at the different ways they are used. A risk assessment can be used to determine insurance mortgage rates as well based on many factors. For instance the environment can be taken into consideration; if a house is built in an area with a higher potential for natural disasters then insurance rates may be much higher. This is often the reason why many insurance companies may not cover acts of god as it is a more difficult statistic to cover with any regularity leaving it to more specialized companies willing to take the risk, flood and earthquake insurance are classic examples of this that may not be covered under mortgage insurance. A risk assessment can even be used for determining the life expectancy of humans as well as animals that may be endangered. An animals’ population, habitat, diet, and human interaction may be taken into account to determine it endangered species status and what steps might need to be taken to save it. There are many different areas that a risk assessment can be used to determine any number of factors to determine a mathematical ‘what if’ equation to answer the question ‘what is the purpose of a risk assessment?’
