An explanation of risk management for businesses

<p><i>In this video, Informa TechTarget industry editor Craig Stedman defines risk management and explains why it’s important for businesses.</i></p>
<p>Risk management turns uncertainty into opportunity.</p>
<p>Business always involves risk, whether it be financial uncertainties, technology issues, <a href=”https://www.techtarget.com/searchcio/definition/strategic-management”>strategic management</a> errors or natural disasters. While these risks can be damaging, some degree of risk is necessary for a business to grow.</p>
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<p>Risk management is the process of identifying, assessing and controlling threats to an organization’s capital, earnings and operations. While it’s not meant to eliminate risk completely, risk management focuses on making smart risk decisions and <a href=”https://www.techtarget.com/searchsecurity/definition/What-is-risk-appetite”>identifying risks that are worth taking</a>.</p>
<p>Here, we’ll discuss the risk management process.</p>
<p>An effective risk management program helps an organization <a href=”https://www.techtarget.com/searchsecurity/definition/risk-analysis”>consider the full range of risks</a> it faces and their potential impact on business goals. This approach is sometimes called <a href=”https://www.techtarget.com/searchcio/definition/enterprise-risk-management”>enterprise risk management</a>, since it emphasizes the positive risks that could increase business value.</p>
<p>A risk management plan should involve the following steps:</p>
<ol class=”default-list”>
<li>Identify the risks faced by your organization.</li>
<li>Assess the likelihood and possible impact of each one.</li>
<li>Evaluate and prioritize the risks based on business objectives.</li>
<li>Treat — or respond to — the risk conditions.</li>
<li>Monitor the results of risk controls and adjust if necessary.</li>
</ol>
<p>For example, let’s consider a cafe’s risk management plan. It currently relies on one supplier for coffee beans. Management dete

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