What are the most effective ways to determine the likelihood of a risk?

2 Use qualitative and quantitative methods

To determine the likelihood of a risk, you can use both qualitative and quantitative methods. Qualitative methods involve using expert judgment, intuition, experience, and best practices to assign a probability rating to a risk, such as high, medium, or low. Quantitative methods involve using numerical data, statistical analysis, models, and simulations to calculate a probability value for a risk, such as a percentage or a frequency. Both methods have their advantages and limitations, so you should use them in combination to get a more comprehensive and accurate picture of your risk exposure.

3 Apply risk identification and assessment tools

To support your qualitative and quantitative methods, you can apply various risk identification and assessment tools which can help you collect, analyze, and communicate information about your risks. For example, a SWOT analysis can help you identify the strengths, weaknesses, opportunities, and threats related to your corporate real estate strategy and operations. Additionally, a PESTLE analysis can help you identify the political, economic, social, technological, legal, and environmental factors that can affect your corporate real estate performance and risks. Risk mapping is also useful for visualizing your risks on a matrix based on their likelihood and impact. Moreover, scenario analysis can be used to explore the possible outcomes of your risks based on different assumptions and variables. Lastly, Monte Carlo simulation can be used to estimate the probability distribution of your risks based on multiple random scenarios.

4 Review and update your risk assessment

To ensure that your risk assessment is relevant and reliable, you need to review and update it regularly. You should monitor the internal and external factors that can affect your risk likelihood, such as changes in market conditions, regulations, customer preferences, technology, and competitors. You should also collect feedback from your stakeholders, such as employees, clients, suppliers, and investors, to validate and improve your risk assessment. By reviewing and updating your risk assessment, you can adapt to the changing environment and manage your risks more effectively.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?