Risk Management Basics

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What is risk management?

Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings.

Why is risk management important?

It helps prevent financial losses and safeguards an organization's assets.

What are the key components of risk management?

Identification, assessment, mitigation, monitoring, and reporting.

What is risk identification?

Finding what risks could affect a project or organization.

What is risk assessment?

Evaluating the likelihood and impact of identified risks.

What are some common types of risks in business?

Financial risk, operational risk, strategic risk, compliance risk.

What is a risk register?

A tool used to document risks, their severity, and actions to manage them.

How do you mitigate risks?

By implementing strategies to reduce their impact or likelihood.

What is the difference between a risk and a hazard?

A risk is the likelihood of a negative outcome, while a hazard is the potential source of harm.

What role does insurance play in risk management?

Insurance helps manage financial risks by compensating for losses.

What is risk monitoring?

Regularly checking and reviewing risks and the effectiveness of risk management strategies.

What is inherent risk?

The risk level before any controls or actions are taken to mitigate it.

What is residual risk?

The remaining risk after mitigation measures are in place.

Can you give an example of a risk management strategy?

Diversifying investments to reduce financial risk.

What is the role of a risk manager?

To oversee the risk management process and ensure that risks are effectively managed.