What is the purpose of risk analysis in capital planning?

The purpose of risk analysis in capital planning is to assess potential risks and mitigate uncertainties. This process involves identifying, evaluating, and prioritizing risks associated with capital projects and investments. By understanding the risks, decision-makers can develop strategies to manage those risks effectively, ensuring that projects are completed on time and within budget. Additionally, by mitigating uncertainties, organizations can make more informed decisions, enhancing the overall success and sustainability of capital investments. A strong risk analysis framework helps in safeguarding public funds and optimizing resource allocation, which is essential for effective capital planning.