3. Risk analysis is the conversion of risk **data** into risk decision making information. Analysis provides the basis for the project manager to work on the "right" and most critical risks. During the risk analysis step, each risk is assessed to determine: Likelihood: the probability that the risk will result in a loss and Impact: the size or cost of that loss if the risk turns into a problem. The list of risks is then prioritized based on the results of our risk analysis. Since resource limitations rarely allow the consideration of all risks, the prioritized list of risks is used to identify risks requiring additional planning and action. Other risks are documented and tracked for possible future consideration. Based on changing conditions, additional information, the identification of new risks, or the closure of existing risks, the list of risks requiring additional planning and action may require periodic updates (Westfall, 2000).