Risk management is the process of identifying, evaluating and controlling threats to an organization's capital and profits. These risks come from a variety of sources, including financial uncertainties, legal liabilities, technological problems, strategic management errors, accidents, and natural disasters. The process begins with an initial consideration of risk prevention and then moves on to three additional ways to address risk (transfer, spread and reduction). A project team could implement risk mitigation strategies to identify, monitor and evaluate the risks and consequences inherent to the completion of a specific project, such as the creation of new products.
Risk management standards establish a specific set of strategic processes that begin with the objectives of an organization and are intended to identify risks and promote risk mitigation through best practices. In business, risk management is defined as the process of identifying, monitoring and managing potential risks in order to minimize the negative impact they may have on an organization. Simplify the way you manage risk and regulatory compliance with a unified GRC platform powered by AI and all your data. Manage risks stemming from changing market conditions, evolving regulations, or complicated operations, while increasing effectiveness and efficiency.
Nowadays, many universities around the world offer risk management courses at the undergraduate and graduate levels; some of them offer degrees dedicated exclusively to risk management. Since risk analysis is fundamentally based on perception, it is important for the project professional to involve stakeholders from the start to identify risks. If you're interested in a risk management career, there are many paths you can follow, from risk officer, risk manager, advisor, specialist, or consultant. The contractual transfer of a risk to a third party, such as insurance to cover possible damage or injury to the property, transfers the risks associated with the property from the owner to the insurance company.
The risk assessment compares the magnitude of each risk and classifies them according to their salience and consequences. To understand the different perceptions, it is important to describe risk events clearly, separating the causes (the facts now), the risk events (situations that may occur) and the effects (which have an impact on one or more of the project's measures). Risk treatment is the implementation of policies and procedures that will help avoid or minimize risks. The APM Risk SIG (Specific Interest Group) provides a forum in which to share knowledge and ideas, develop experience and understanding, and actively promote the adoption of project risk management.
The definitions of risk management vary significantly depending on whether the method used is in the context of safety, engineering, project management, financial portfolios, actuarial evaluations, public health and safety, or industrial processes.