Risk management is the process of identifying, assessing, and controlling risks to an organization. It includes the identification of risks, the assessment of risks, and the implementation of controls to mitigate or reduce the risks.
There are three types of risk management: operational risk management, financial risk management, and enterprise risk management. Operational risk management deals with the risks associated with the operations of an organization. Financial risk management deals with the risks associated with the financial activities of an organization. Enterprise risk management deals with all types of risks faced by an organization.
The goal of risk management is to minimize the negative impact of risks on an organization and its stakeholders. Risk management is a proactive process that helps organizations identify and control potential sources of loss before they occur.
There are four steps in the risk management process: identification, assessment, control, and monitoring. The first step in risk management is identification. Identification involves identifying potential sources of loss or harm to an organization. The second step is assessment. Assessment involves evaluating the likelihood and severity of each identified source of loss or harm. The third step is control. Control involves implementing controls to mitigate or reduce the identified sources of loss or harm. The fourth step is monitoring. Monitoring involves periodically reviewing and updating the controls in place to ensure they remain effective in mitigating or reducing identified sources of loss or harm