What type of analysis is used to assess whether an organization's risk level is acceptable?

The identification of risk analysis as the method used to determine whether an organization's risk level is acceptable is essential in the context of risk management. Risk analysis involves the systematic process of assessing risks associated with an organization's activities, programs, or processes. This type of analysis evaluates the potential for adverse outcomes by considering both the probability of events occurring and the potential consequences—enabled by quantitative and qualitative approaches.

By conducting risk analysis, an organization can identify various risks, gauge their severity, and assess the acceptability of these risks in light of the organization’s risk tolerance and strategic objectives. This helps in making informed decisions about risk mitigation, acceptance, transfer, or avoidance, ensuring that the organization operates within a framework that aligns with its risk appetite and compliance requirements.

In contrast, other options such as cost-benefit analysis focus on evaluating the financial aspects of decisions rather than direct risk levels. Impact assessments evaluate the effects of specific events or changes but do not comprehensively address overall organizational risk in terms of acceptability. Compliance audits ensure adherence to laws and regulations but do not inherently assess risk levels in the organization’s decision-making process. Thus, risk analysis is the most appropriate method for determining whether an organization's overall risk level is acceptable.