Farrokhi earth embankment dam is located near Qayen in one of the most active seismic regions of Iran (Ferdows seismic state). Due to presence of large active faults in the area, like Dashte-Bayaz and Abiz faults, it is necessary to obtain the total risk rating of the dam and to evaluate the liquefaction potential of the soil layer beneath the dam foundation. The total risk for embankment dam structures depends on two factors, i.e., (i) the seismic hazard rating of the dam site, and, (ii) the risk rating of the dam and appurtenant structures. Bureaue’s method of total risk analysis is used in this paper. Applying this method to Farrokhi dam, the risk factors are determined from different aspects i.e., dam type, age, size, and downstream risk potential. The total risk factor is then determined by considering the effects of each factor as well as seismic vulnerability rating of the dam site. Liquefaction, defined as the transformation of a granular material from a solid to a liquefied state, is a common hazard for civil infrastructures at the time of major earthquakes. In the present study, the procedure recommended by Youd et al. (J Geotech Geoenviron Eng ASCE, 127(10):817–833, 2001), based on SPT results were used. Results of the field geotechnical investigation program carried out on the dam foundation, including SPT data, were used in the liquefaction analysis. Ground motion parameters required in the analysis, i.e. peak horizontal acceleration (amax), were calculated after a careful study of the active faults in the region. Based on the findings of the present study, the alluvial foundation is liquefiable to 3 m of depth in some regions and remedial measures should be taken in advance. An elaborate stability analysis of the dam embankment is deemed necessary.