Risk Definition
Risk is the probability or likelihood of something happening that will have an impact on objectives. In other words, risk is the chance of something bad happening.
There are different types of risks that can affect businesses, including financial risks, operational risks, and compliance risks. Financial risks include things like interest rate changes and currency fluctuations. Operational risks include things like supply chain disruptions and natural disasters. Compliance risks include things like data breaches and regulatory changes.
Businesses need to identify and assess the risks they face in order to develop appropriate risk management strategies. Risk management is the process of identifying, assessing, and responding to risks. It includes both proactive measures (like insurance) and reactive measures (like crisis management plans).
The goal of risk management is to minimize the impact of negative events while maximizing the chances of positive events. By taking steps to reduce the likelihood or severity of potential problems, businesses can protect themselves from potentially devastating losses.
