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What is Risk Management?

In Risk Management on May 2, 2012 at 9:30 pm

Risk is in the roots of every business. People seek security. In the hierarchy of human needs security comes after food, shelter and medical care. There after, the people think about taking precaution, safety measures against the risk. Now first question arises in everyone’s mind to safeguard against the economic risk. Economic risk is the possibility of loosing economic security. In the other way, risk is the standard deviation of the possible outcome. Risk can be seen at many places in day to day life. For example-

A car driver faces the risk of accident of car. Theft, fire risk is present to every household and business house. A risk of explosion/ Implosion might arise in a steel factory.

Therefore, people seek to avoid, minimize, and prevent risks associated with their day to day life. Every human has different individual characteristics and the risk associated with each and every individual is based on different criteria like age, sex, occupation, habits, nature of work, experience etc. In the similar way, in industrial houses and business complexes, the risk depends upon nature of business, degree of hazard, exposure of units, surroundings, environmental and geographical locations as it can be easily found in day to day example that same units at different places may have different risk. Two individual with same age and height working in a same factory may have different risk due to their work.

In simple terms – Risk Management can be defined as:

Risk management is the combination of probability of an event and it consequences. In other way, Risk management is a systematic process of identifying, evaluating, analysis, controlling and reducing the risk involved at various levels of organization and individuals.

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