Risk Management
Risk management is the process of measuring risk and developing strategies to minimize, control and eliminate that risk. It is summed up very well by ISO 31000 as “the effect of uncertainty on objectives.” When a risk is deemed unacceptable, businesses use a range of tactics in order to mitigate and manage that risk. These include:
- Risk assumption: Absorbing minor losses to protect against large ones.
- Risk avoidance: If a company can’t eliminate all risks, they seek to avoid or deflect as many risks as possible.
- Risk retention: If the risk is determined worth the reward, a company may decide to accept the risk and plan for fallout.
- Risk transfer: Like when you purchase insurance, risk transfer involves contractually shifting your risk to another party.
- Risk monitoring: Continuously tracking and monitoring risks to a business.
- Risk sharing: At times the consequences of a risk is shared and/or that risk could be shared with a third party, such as a vendor so the consequence of the risk is shared.