What is Risk Management?
Enterprise Risk Management is the process of structuring the activities of an individual or organization to reduce the effects of risk on such areas as earnings, the ability to achieve strategic goals and business continuity. As the removal of all risk would also necessitate the removal of all potential for growth and opportunity, the goal is to find the highest level of reward within the acceptable level of risk. The illustration below shows the four major components of risk management
Identify Exposures: In this step of assessment, the objective is to learn about the individual or organization and identify areas of risk.
Develop Strategies: This step is to design and build a risk management plan using tools of risk transfer, avoidance and mitigation.
Implement Programs: Now it is time to implement the plans for management of risk.
Monitor Plan: Evaluate effectiveness and need for modification of plan over time.
But Isn’t Insurance Enough?
Traditionally, most of the risk management process consisted solely of risk transfer utilizing insurance. Today, there are current and emerging risks that are either unable or impractical to insure. To effectively manage risk, a risk manager must go beyond insurance and consider areas such as human resource and talent, workplace safety, the speed of information, public image and regulatory compliance.