How is "risk prioritization" performed in risk management?

Risk prioritization is performed by ranking risks based on their potential impact and likelihood of occurrence. This process helps organizations focus on the risks that could cause the most harm or disruption if they materialize. By assessing both the severity of the consequences (impact) and how likely they are to happen (likelihood), stakeholders can determine which risks need immediate attention and which can be monitored or managed over time.

This systematic approach allows for informed decision-making, enabling resources to be allocated effectively to mitigate the highest-priority risks first. It enhances the overall risk management process by ensuring that the most critical challenges are addressed proactively.

The other approaches presented would not be effective in risk management. For example, eliminating all identified risks is not practical or feasible, as some level of risk is inherent in all activities. Randomly selecting risks to address would lack strategic focus, resulting in ineffective mitigation efforts. Lastly, focusing solely on the most visible risks can lead to overlooking underlying or less apparent risks that may pose significant threats.