| Risk management is the systematic process of identifying, assessing, and mitigating potential threats or uncertainties that can affect an organization. Risk management processes typically consist of the following steps:
- Identification: Recognize and document potential risks that could impact the organization's objectives
- Assessment: Evaluate the likelihood and potential impact of identified risks
- Prioritization: Rank risks based on likelihood of occurrence and potential impact to decide which ones require immediate attention
- Treatment: Develop and implement strategies to address identified risks. Treatment options may include:
- Risk acceptance
- Risk transfer (e.g., to a third party or insurance company)
- Risk avoidance
- Risk mitigation (reducing the likelihood or impact)
Monitor and Review: Continuously track risks, review the organization's risk posture, and report on risk management activities. Effective risk management helps organizations protect assets, improve decision-making, optimize operational efficiency, and potentially drive innovation and growth. |
