Essentially all companies exploring for oil and gas should perform a risk analysis to understand the uncertainties in their interpretations and to properly value order prospects in a company’s drilling portfolio. For conventional exploration in clastic environments, primarily sands encased in shales, a key component of the risk analysis process is evaluating direct hydrocarbon indicators, which can have a significant impact on the final risk value. We investigate the role AVO plays in the risk assessment process as a portion of a comprehensive and systematic DHI evaluation. Documentation of the geologic context and quantification of data quality and DHI characteristics, including AVO characteristics, is necessary to properly assess a prospect’s risk. A DHI consortium database of over 230 drilled prospects provides statistics to determine the importance of data quality elements, primarily in class 2 and 3 geologic settings. The most important AVO interpretation characteristics are also identified based on statistical results and correlated with well success rates. A significant conclusion is the relevance of AVO in risk analysis when it is the dominant component in the DHI portion of the risk. Critical in the risk assessment process is understanding the role AVO and DHI analysis play when prospects approach class 1 geologic settings. The impact that hydrocarbons have on the seismic response is significantly diminished in this setting versus the other AVO classes. All of these observations confirm the necessity of properly evaluating a prospect’s geologic setting and implementing a consistent and systematic risk analysis process including appropriate DHI and AVO components.