What Is Risk Management?

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Risk management is a process used by organizations to identify, assess, manage and prioritize different risks associated with operation. After a risk is identified, the risk manager must develop a plan to minimize or reduce the impact of it. Managers must access and prioritize risks in order to prevent potentially damaging events. Depending on the business or organization, there are specific strategies to manage individual risks.

The primary goal of risk management is to protect a business or organization from vulnerability. Most risk management plans concentrate on maintaining organization viability and decreasing any financial risks. Risk management is designed to provide protection to customers, employees and the public from damaging events that have a direct effect on them.

There are different types of risk management plans used to mitigate an organization's risks. Common workplace-related risks include accidents, natural disasters and fires. Legal risks include sexual harassment, fraud and theft. Risk management plans are also required to manage risks associated with business practices, such as market instability, data storage, project failures, credit risks and record security. Risk management is useful for protecting physical facilities, securing information and protecting any physical assets an organization uses or owns. Risks are properly managed in an organization by recognizing the consequences associated with individual risks and developing a plan for them.