Risk Management is the term which defines:
- the identification of risks to the viability of an organisation
- the grading of those risks to prioritise action
- and the utilisation of resources to expunge or minimise such risk.
The risks to an organisation are multifaceted and include:
- Industry; and
- Life cycle.
An organisation may protect itself against some risks by buying appropriate insurance cover but even then it behoves an organisation to take appropriate steps to minimise the risks to its operations which in turn leads to a lower cost of insurance.
In other instances the risk is uninsurable and the organisation must therefore look to its policies and procedures to see if that risk maybe minimised or passed on to other parties.
A comprehensive risk analysis is an exercise which all organisations should undertake followed by a grading of those risks from highest to lowest in terms of both probability and detriment to the organisation.