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Probabilistic risk assessment

Risk management tools allow uncertainty to be addressed by identifying and generating metrics, parameterizing, prioritizing, and developing responses, and tracking risk. These activities may be difficult to track without tools and techniques, documentation and information systems.

There are two distinct types of risk tools identified by their approach: market-level tools using the capital asset pricing model (CAP-M) and component-level tools with probabilistic risk assessment (PRA). Market-level tools use market forces to make risk decisions between securities. Component-level tools use the functions of probability and impact of individual risks to make decisions between resource allocations.

ISO/IEC 31010 (Risk assessment techniques) has a detailed but non-exhaustive list of tools and techniques available for assessing risk.