Risk management


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Risk management

The process of identifying and evaluating risks and selecting and managing techniques to adapt to risk exposures.

Risk Management

The process of identifying risks to an investment and, if possible, mitigating them. The first stage of risk management is determining the types and magnitudes of risk. For example, a risk manager might look at a bond and identify the possibility of default as a risk and evaluate the likelihood of that scenario. The second stage is taking steps to remedy risk, insofar as it is possible. In the above example, the risk manager might recommend buying other bonds to offset the risk of default on any single bond. Sometimes risk cannot be mitigated; in that case, risk managers evaluate how central the investment is to one's investment goals and risk tolerance. Generally speaking, investors seek the highest possible return at the lowest possible risk. Risk management helps them achieve this goal by showing how their investments may be affected and finding ways to alleviate the situation.

Risk management.

Risk management is a set of strategies for analyzing potential risks and instituting policies and procedures to deal with them. The work of assessing the possibilities, setting priorities, and finding cost-effective solutions is also described as business continuity planning.

In a business environment, some risks, such as economic pressures or technology meltdowns, are universal while others are unique to a particular venture or physical location.

Large companies may use a combination of strategies to manage risk, including buying insurance, creating redundant systems, diversifying physical locations or core businesses, and establishing other hedges.

For an individual investor, risk can be managed in several ways: insuring at least a portion of your portfolio, allocating your assets across classes, diversifying your holdings, and hedging with derivative products.

risk management

A systematic approach to identifying insurable and noninsurable risks, evaluating the risk of loss versus the cost of insurance, and minimizing the possibility of loss through well-planned and regularly followed systems and procedures. Especially in construction, which typically has the very highest premiums for workers' compensation insurance, well-planned and well-executed risk management programs can result in significant savings on premiums.

References in periodicals archive ?
Risk Management Committee or Board -- drawing members are from all levels and parts of the organization, provides overall guidance to risk management activities.
Integrating risk management with strategy-setting transforms risk management from "avoiding and hedging bets" to a differentiating skill for protecting and enhancing enterprise value as management seeks to make the best bets in the pursuit of growth and returns.
Proceedings of the 1998 Wilderness Risk Management Conference, (pp.
Arnold Schanfield, CPA, CIA, CA, CFE Vice-President, Risk Management and Internal Audit Itochu International New York City
a $12 billion energy company, Andrew Sunderman, vice president and chief risk officer, is responsible for strategy and analysis of commodity and credit risk, and for the development of risk management strategies involving capital allocation decision-making for the company's three non-regulated businesses.
Enlist them in the development of your camp's risk management philosophy.
Supervisory staff is monitoring each bank's management of hedge fund counterparty exposures as well as the bank's efforts to address any identified risk management shortcomings.
said, "we are extremely pleased with this accretive acquisition because Sunrisk's industry leading risk management practice highly complements and broadens Yucheng existing IT solution and service offerings for our banking clients.
If your employees are not properly trained to implement your contingency plans and security policies, your risk management efforts will be wasted.
When firms do not want to develop their own risk management departments or employee benefits programs, they use one of the many consulting firms specializing in these fields.
There are five basic steps in the risk management process - risk identification, risk analysis, risk financing, risk control, and risk administration (monitoring).

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