What is Risk Management?
- Risk & Insurance Management Society:
A sound management discipline whose goals it is to protect assets and resources. - Public Risk Management Association:
Planning for the possible negative consequences arising out of an entity’s activities. - IIA-Associate in Risk Management (Section 54):
The process of making and carrying out decisions that protect the organization’s assets.
Basically, Risk Management Involves:
- Trying to stop losses from happening
(through avoidance, risk control, loss control, or loss prevention) - Paying for the losses that do occur
(through reduction, insurance or risk transfer)
Steps in the Risk Management Process:
- Identify Risks and Analyze Them:
- What services and assets could cause a loss for your/our entity? For example, a loss of money, public image or reputation, loss of income, damage to physical property, human resource loss, etc.
- What kinds of losses occur, how often and how severe are they?
- Review Options For Responding to Risks:
- Examine the feasibility of alternative risk management techniques (exposure avoidance, loss prevention, loss reduction, segregation of exposure units, contractual or risk transfer, risk financing or retention.
- Select the Best Technique(s):
- Determine which risk management treatment or combination of treatments will best suit the risk and your entity.
- Implement and Monitor the Results:
- After putting programs into place, monitor the results, measure effectiveness and make revisions as necessary.
