We present the first modern seismic hazard and risk assessment in the Bhutan Himalaya. We used a fault-based probabilistic seismic hazard analysis based on fault locations, slip-rates and paleoseismic earthquake data. We worked with two seismic intensity measures: the peak-ground acceleration (PGA) and Modified Mercalli Intensity (MMI). We extend the hazard analysis to risk by using local building distribution data and making various assumptions about building distribution and fragility. We find, unsurprisingly, that the Main Himalayan Thrust (MHT) is the primary source of hazard, with oblique strike-slip faults cutting across and beneath the Himalaya, and extensional grabens on the northern edge of Bhutan a secondary hazard. The hazard is highest in the southern part of Bhutan where the MHT is shallow, and site conditions lead to amplification of shaking. The risk does not reflect the hazard solely, but also the distribution of exposure, which is concentrated in the cities. We also simulated the 1714 MW8 earthquake, producing 10,000 possible shakemaps in terms of PGA and MMI; we find that many locations could experience PGA values of over 1 g, and on average, up to 18% of the Bhutanese population could be affected. Refining the probable frequency of larger events on the MHT in this region, developing local Ground Motion Prediction Equations, creating tailored vulnerability models for typical Bhutanese buildings, and improving the exposure mapping would most improve the hazard and risk results shown here. The existing building code of Bhutan, adopted from the Indian Seismic Zonation of 2002 (BIS-1893, 2002), uses a PGA of 0.36 g uniformly applied across the entire country. Our study, however, presents a non-uniform hazard level across the country and thus questions the relevancy of the current code of construction practices in the country.