Around 90% of world trade, by volume, is facilitated by the international shipping industry. Over the past few decades seaborne trade has expanded enormously carrying large quantities of cargo including the hazardous ones. Even a single accident can cause a serious environmental disaster and loss of human lives. This has led to increased focus on analysis of ship traffic both to prevent accidents andto make informed decisions about fairway design, traffic separation schemes and disposition of emergency services. Presently, the busy waterways are the areas with high vessel traffic density and hence pose a potential threat for collisions. Therefore, the collision risk assessment is of a significance importance for ships crossing through these narrow, shallow and busy waterways. In this paper AIS data for Malacca Strait has been analysed for a period of one month to quantitatively assess the parameters of collision risk. The Malacca strait is divided into several zones and zone-wise analysis has been done to identify the most risky zones in which collision risk reduction measures can be prioritized. The collision risk parameters used here are index of speed dispersion and collision risk value. A procedure to quantitatively estimate the collision risk value for a particular zone has been described. Based on these parameters it is concluded that legs 7W, 2W, 3W & 14E are most risky zones in the strait.