Ageing incurs a natural decline of postural control which has been linked to an increased risk of falling. Accurate balance assessment is important in identifying postural instability and informing targeted interventions to prevent falls in older adults. Inertial sensor (IMU) technology offers a low-cost means for objective quantification of human movement. This paper describes two studies carried out to advance the use of IMU-based balance assessments in older adults. Study 1 (N = 39) presents the development of two new IMU-derived balance measures. Study 2 (N = 248) reports a reliability analysis of IMU postural stability measures and validates the novel balance measures through comparison with clinical scales. We also report a statistical fall risk estimation algorithm based on IMU data captured during static balance assessments alongside a method of improving this fall risk estimate by incorporating standard clinical fall risk factor data. Results suggest that both new balance measures are sensitive to balance deficits captured by the Berg Balance Scale (BBS) and Timed Up and Go test. Results obtained from the fall risk classifier models suggest they are more accurate (67.9%) at estimating fall risk status than a model based on BBS (59.2%). While the accuracies of the reported models are lower than others reported in the literature, the simplicity of the assessment makes it a potentially useful screening tool for balance impairments and falls risk. The algorithms presented in this paper may be suitable for implementation on a smartphone and could facilitate unsupervised assessment in the home.