Risk assessment suggested  for Royal Motors   consist of the following elements, performed, more or less, in the following order.

·         Identify  assessing   threats

·         Assessing  the vulnerability  of critical assets to specific threats

·         Determine the risk  such as   expected likelihood and consequences of specific types of disasters.

·         Identify ways to reduce or eliminate  those risks

·         Prioritize risk reduction measures based on a strategy

Once risks have been identified, they must   be assessed as to their potential severity of impact, such as damage or loss  and to the probability of occurrence. These quantities can be either simple to measure, in the case of the value of a lost building, or impossible to know for sure in the case of the probability of an unlikely event occurring. As such  in the assessment process it is critical to make the best decisions in order to properly prioritize the implementation of the risk assessment  plan. A  short term positive improvement can have long-term negative impacts. The fundamental difficulty in risk assessment is determining the rate of occurrence since statistical information is not available on all kinds of past incidents. Therefore it is necessary to record all incidents for future usage.  Evaluating the severity of the consequences   is often quite difficult for intangible assets. Asset valuation is another question that needs to be addressed. Therefore, best opinions and available statistics are the primary sources of information. Yet, risk assessment should produce such information for the management of the  Royal Motors  that the primary risks are easy to understand and that the risk assessment  decisions may be prioritized.