Risk management

The process of measuring, or assessing risk and then developing strategies to manage it; it is a systematic approach to inclusion of uncertainty in decision-making through analysis that includes risk assessment, strategies to manage or circumvent risk, and mitigation of risk using available resources. In general usage, the convention is to focus only on potential negative impacts of a future event on some characteristic of value that may arise from a future event. In general, the strategies employed include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk. Traditional risk management focuses on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death, and lawsuits). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments. Intangible risk management focuses on the risks associated with human capital, such as knowledge risk, relationship risk, and engagement-process risk. Regardless of the type of risk management, all large corporations have risk management teams and small groups and corporations practice informal, if not formal, risk management.