Risk management

(redirected from Loss Assumptions)
Also found in: Dictionary, Medical, Encyclopedia.

Risk management

The process of identifying and evaluating risks and selecting and managing techniques to adapt to risk exposures.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
This means that the cumulative effects of the hundreds of loss assumptions in the data system would need to be higher to reduce this calorie total.
While the historical data obtained from the property being analyzed is a reasonable basis for a credit loss assumption, the applicability of historical rates will depend on tenant composition, economic cycles, and management expertise.
The modeling process first uses the estimation and stress of a base-case loss assumption to reflect asset performance in a stressed environment.
The upgrades are driven by Fitch's revision of key assumptions applicable to the entire Verizon platform, namely the default multiples, the default assumptions, and the upgrade loss assumptions. Additionally, VZOT 2016-1 has entered its amortization period.
Upgrade Loss: Fitch has lowered its upgrade loss assumptions to 2.5%, 2%, and 1.5% at 'AAAsf', 'AAsf', and 'Asf', respectively, reduced from 5%, 4.5%, and 4%.
However, we anticipate reinsurance activity will increase over the intermediate term, as life insurers continue to update loss assumptions and strengthen reserves.
Credit enhancement is sufficient to cover Fitch-stressed cumulative net loss assumptions in all Fitch scenarios.
Fitch publishes its pool-level default and loss assumptions at each rating stress in a separate report.
The current credit enhancement (CE) available for each class of notes adequately supports the aforementioned stressed loss assumptions for the transaction.