Risk Management

Risk management is a systematic approach to minimizing an organization's exposure to risk. A risk management system includes various policies, procedures and practices that work in unison to identify, analyze, evaluate, address and monitor risk. Risk management information is used along with other corporate information, such as feasibility, to arrive at a risk management decision. Transferring risk to another party, lessening the negative affect of risk and avoiding risk altogether are considered risk management strategies. Examples of risk management practices include purchasing insurance, installing security systems, maintaining cash reserves and diversification. Traditional risk management works to reduce vulnerabilities that are associated with accidents, deaths and lawsuits, among others. Financial risk management focuses on minimizing risks through the use of financial tools and instruments including various trading techniques and financial analysis. Many large corporations employ teams of risk management personnel.