Risk management is a process for identifying, assessing, and prioritizing risks of different kinds. Once the risks are identified, the risk manager will create a plan to minimize or eliminate the impact of negative events. The process of risk management is designed to reduce or eliminate the risk of certain kinds of events happening or having an impact on the business. The strategies to manage risk typically include transferring the risk to another party, avoiding the risk, reducing the negative effect or probability of the risk, or even accepting some or all of the potential or actual consequences of a particular risk.
Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate eventsor to maximize the realization of opportunities. It is the process of analyzing exposure to risk and determining how to best handle such exposure.
Risk management is a systematic approach to minimizing an organization’s exposure to risk. A risk management system includes various policies, procedures and practices that work in unison to identify, analyze, evaluate, address and monitor risk. Risk management information is used along with other corporate information, such as feasibility, to arrive at a risk management decision. Transferring risk to another party, lessening the negative affect of risk and avoiding risk altogether are considered risk management strategies. Examples of risk management practices include purchasing insurance, installing security systems, maintaining cash reserves and diversificationa