Definitions: Risk Management

Definition

Risk management involves investigating, alleviating, and policing potential  risks. To perform risk management, it is important to consider risks from all angles including disasters, attacks, failures, etc.

Business Applications

Although it seems impossible to  prevent uncertain threats from occurring, a company must have its own strategy in place for managing business in the face of a threat or avoiding the risks altogether. It is important to assess risks throughout your business.

In the IT sector, computer systems and networks are relied on heavily, so identifying and managing risks to those systems is important to the success of your business. For example, in a healthcare related business, it would be extremely important to mitigate the risk of data loss and privacy issues. A business that  relies on its Website for sales, however, would want to minimize or eliminate any downtime for their Website.

All businesses must realize some level of risk, though, no matter what types of plans are in place to mitigate or alleviate them. Some risks cannot be avoided.

Concerns

In many business situations, people are uncomfortable discussing risks. Bringing up potential failures puts people on edge, and some might want to deny that such a problem could ever exist or happen.

Details:

The U.S. Environmental Protection Agency has identified seven “rules” for effective risk assessment and management. These rules are:

1. Problem formulation
2. Stakeholder involvement
3. Quantitative risk assessment
4. Communication
5. Iteration and evaluation
6. Informed decision making
7. Flexibility

Related Knowledge Network Content