What is a common tool used in ORM for risk assessment?

Risk assessment matrices are a commonly used tool in operational risk management (ORM) for evaluating and prioritizing risks. These matrices provide a structured approach to categorize risks based on two key dimensions: the likelihood of an incident occurring and the impact that such an incident would have on the organization. By plotting risks within the matrix, organizations can visually assess which risks require immediate attention and which can be monitored over time, facilitating informed decision-making regarding resource allocation and mitigation strategies.

The use of a risk assessment matrix enables organizations to quantify and compare risks in a standardized way, effectively communicating risk levels to stakeholders and aiding in compliance with regulatory and governance requirements. This tool remains fundamental in ORM because it simplifies complex risk data into a more manageable format, making it easier to identify potential areas of concern.

Other options, while potentially useful in the context of risk management, do not serve as primary tools for conducting risk assessments specifically. For example, cost-benefit analysis reports focus on evaluating the economic impact of certain decisions rather than assessing risks directly. Risk management software can assist in analyzing data but typically functions as a platform rather than a specific assessment tool. Market analysis forecasts look at external market risks and trends rather than internal operational risks, thus being less relevant for direct risk assessment in ORM.