Managing Risk Business Link

Managing risk

Every business faces risks that could present threats to its success.

Risk is defined as the probability of an event and its consequences. Risk

management is the practice of using processes, methods and tools for managing

these risks.

Risk management focuses on identifying what could go wrong, evaluating which

risks should be dealt with and implementing strategies to deal with those risks.

Businesses that have identified the risks will be better prepared and have a more

cost-effective way of dealing with them.

This guide sets out how to identify the risks your business may face. It also looks

at how to implement an effective risk management policy and programme which

can increase your business' chances of success and reduce the possibility of

failure.

The risk management process

Businesses face many risks, therefore risk management should be a central part of

any business' strategic management.

Risk management helps you to identify and address the risks facing your business

and in doing so increase the likelihood of successfully achieving your businesses

objectives.

A risk management process involves:

methodically identifying the risks surrounding your business activities

assessing the likelihood of an event occurring

understanding how to respond to these events

putting systems in place to deal with the consequences

monitoring the effectiveness of your risk management approaches and controls

As a result, the process of risk management:

improves decision-making, planning and prioritisation

helps you allocate capital and resources more efficiently

allows you to anticipate what may go wrong, minimising the amount of firefighting

you have to do or, in a worst-case scenario, preventing a disaster or

serious financial loss

significantly improves the probability that you will deliver your business plan on

time and to budget

2011/03/20 Managing risk | Business Link

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Risk management...