Construction of the CAREM-25 full-size prototype, a very low power nuclear power station [25 MW(electric)], is scheduled to begin in Argentina in 2001. The CAREM-25 is designed based on principles of inherent safety, passive safety functions, and ease of operation. This paper analyzes the safety philosophy from the point of view of risk by performing a level-III probabilistic safety assessment (PSA) of this prototype. The specific PSA steps are discussed, including a specially developed method to obtain representative initiating events, system analysis by fault trees, event development in event trees, plant and containment response analysis, containment event tree development, consequence calculations, and risk representation. The PSA results are presented and discussed in terms of their own values as well as in comparison to other PSA results performed for larger nuclear power plants (NPPs). The advantages of the CAREM-25 from the risk point of view are studied in terms of the effective reduction of both the probability of severe accident sequences and the potential consequences of such sequences (radiological and emergency preparedness impact). The risk point of view also provides a perspective to analyze the impact of several design modifications in order to further reduce the residual risk of the NPP. These design modifications, several of which have already been included in the prototype, are discussed and evaluated.