Risk analytics (or risk analysis) is the study of the underlying uncertainty of a given course of action. It often work in tandem with forecasting professionals to minimize future negative unforseen effects. The uncertainty of forecasted future cash flows streams, variance of portfolio/stock returns, statistical analysis to determine the probability of a project’s success or failure, and possible future economic states, these all fall under risk analytics.
You can mitigate these risks by clearly defining, understanding, and managing tolerance for and exposure to risk. Advanced analytics capabilities enable clearer visibility into the challenges associated with managing the many types of risk in such key areas as operations, regulatory compliance, supply chain, finance, ecommerce, and credit. By using analytics to measure, quantify, and predict risk, leaders can rely less on intuition and create a consistent methodology steeped in data-driven insights.
Almost all sorts of large businesses require a minimum sort of risk analysis. For example, commercial banks need to properly hedge foreign exchange exposure of oversees loans while large department stores must factor in the possibility of reduced revenues due to a global recession. Risk analysis allows professionals to identify and mitigate risks, but not avoid them completely. Proper risk analysis often includes mathematical and statistical software programs.