Risk identification is the process of finding, recognizing, and documenting risks that could prevent an organization from achieving its objectives. Companies use a combination of Top-Down and Bottom-Up approaches to identify threats.

The top-down approach focuses on strategic risks and is led by senior executives and board members. It looks at macroeconomic trends, regulatory changes, and competitive pressures to identify high-level threats to the business model.

The bottom-up approach collects risk data directly from front-line employees and operational managers. It uses workshops, surveys, and risk self-assessments to identify day-to-day process vulnerabilities.