- "Risk management is the identification, evaluation, and prioritization of risks... followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities."
The practice of identifying, assessing, and prioritizing risks and taking steps to minimize, monitor, and control them.
Types of Risks: A major aspect of risk management is to identify and categorize different types of risks. Risks can be categorized into financial, operational, market, credit, and strategic risk.
Risk Assessment: Risk Assessment involves identifying, analyzing, and evaluating potential risks in the operations of an organization.
Risk Response: Based on the outcome of risk assessment, risk managers need to determine how to respond to risks. They can choose to accept, transfer, mitigate, or avoid risks.
Risk Control: Risk control involves implementing measures to mitigate identified risks. It includes developing and enforcing risk management policies and procedures.
Risk Management Frameworks: There are several risk management frameworks that organizations can adopt. These frameworks include COSO, ISO 31000, and NIST among others.
International Financial Regulations and Laws: International finance and trade are governed by various laws and regulations. Understanding these laws and regulations is important for effective risk management.
Risk Reporting: Risk reports should be communicated to the organization's stakeholders. This should include identifying key risks, risk tolerance levels, and the steps being taken to manage risks.
Insurance and Hedging: Insurance and hedging are strategies that organizations can use to mitigate risks. It involves transferring risk to an insurance company or a financial instrument.
Cybersecurity Risks: With the increasing dependence on technology, cyber risks have become a major threat to organizations. It is important for risk managers to include cybersecurity risk management as part of their overall risk management plan.
Crisis Management: Risk management should include a crisis management plan to respond to emergencies such as natural disasters, pandemics, or other unforeseen events.
Market risk: The risk of financial loss arising from changes in the market price of assets or liabilities.
Credit risk: The risk of financial loss arising from the failure of counterparty to meet its obligations.
Liquidity risk: The risk of financial loss arising from inability to meet liquidity needs in a timely and cost-effective manner.
Operational risk: The risk of financial loss arising from inadequate or failed internal processes, people and systems, or from external events.
Legal risk: The risk of financial loss arising from the failure to comply with laws and regulations or from legal action against the company.
Reputational risk: The risk of financial loss arising from negative publicity, loss of reputation or customer confidence.
Strategic risk: The risk of financial loss arising from adverse business decisions or a failure to adapt to changes in the business environment.
Currency risk: The risk of financial loss arising from fluctuations in exchange rates.
Interest rate risk: The risk of financial loss arising from changes in interest rates.
Systematic risk: The risk of financial loss arising from factors that affect the economy or the financial system as a whole.
- "...risks (defined in ISO 31000 as the effect of uncertainty on objectives)..."
- "Risks can come from various sources including uncertainty in international markets, threats from project failures, legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause."
- "Negative events can be classified as risks while positive events are classified as opportunities."
- "Risk management standards have been developed by various institutions, including the Project Management Institute, the National Institute of Standards and Technology, actuarial societies, and ISO standards."
- "Strategies to manage threats typically include avoiding the threat, reducing the negative effect or probability of the threat, transferring all or part of the threat to another party, and even retaining some or all of the potential or actual consequences of a particular threat."
- "As a professional role, a risk manager will 'oversee the organization's comprehensive insurance and risk management program, assessing and identifying risks that could impede the reputation, safety, security, or financial success of the organization'."
- "Risk Analysts support the technical side of the organization's risk management approach... analysts share their findings with their managers, who use those insights to decide among possible solutions."
- "Methods, definitions and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, financial portfolios, actuarial assessments, or public health and safety."
- "Certain risk management standards have been criticized for having no measurable improvement on risk, whereas the confidence in estimates and decisions seems to increase."
- "Opportunities are uncertain future states with benefits."
- "See also Chief Risk Officer, internal audit, and Financial risk management ยง Corporate finance."
- "Risk managers develop plans to minimize and/or mitigate any negative (financial) outcomes."
- "The primary goal of risk management is to minimize the probability or impact of unfortunate events or maximize the realization of opportunities."
- "Risk evaluations are conducted to assess and identify risks that could impede the reputation, safety, security, or financial success of the organization."
- "Managers use insights from risk analysts to decide among possible solutions."
- "The main components of risk management include the identification, evaluation, and prioritization of risks, followed by the application of resources to minimize, monitor, and control the probability or impact of events."
- "Negative consequences of threats can include financial, reputational, safety, security, or operational impacts."
- "ISO standards provide quality management standards to help work more efficiently and reduce product failures."
- "Negative events can be classified as risks while positive events are classified as opportunities."