This refers to the structured management process for assessing, mitigating or accepting business risk.
Risk management begins with the identification of potential risks, their likelihood and potential impact on the organisation. In the light of the assessment, managers identify appropriate actions to reduce the likelihood of negative risks occurring or to mitigate their impact if they do occur. Where mitigation is not cost effective, or the risk and its impact are outside the organisation’s control, it may be appropriate to accept it as a risk of doing business – possibly insuring against its worst effects. Risk management includes a process of regular review of all risks and their mitigating actions.
Risk management is a term normally found in performance management, financial management and strategic management.
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