Risk Management Basics

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What is risk management?
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Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings.
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Why is risk management important?
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It helps prevent financial losses and safeguards an organization's assets.
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What are the key components of risk management?
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Identification, assessment, mitigation, monitoring, and reporting.
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What is risk identification?
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Finding what risks could affect a project or organization.
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What is risk assessment?
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Evaluating the likelihood and impact of identified risks.
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What are some common types of risks in business?
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Financial risk, operational risk, strategic risk, compliance risk.
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What is a risk register?
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A tool used to document risks, their severity, and actions to manage them.
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How do you mitigate risks?
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By implementing strategies to reduce their impact or likelihood.
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What is the difference between a risk and a hazard?
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A risk is the likelihood of a negative outcome, while a hazard is the potential source of harm.
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What role does insurance play in risk management?
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Insurance helps manage financial risks by compensating for losses.
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What is risk monitoring?
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Regularly checking and reviewing risks and the effectiveness of risk management strategies.
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What is inherent risk?
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The risk level before any controls or actions are taken to mitigate it.
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What is residual risk?
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The remaining risk after mitigation measures are in place.
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Can you give an example of a risk management strategy?
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Diversifying investments to reduce financial risk.
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What is the role of a risk manager?
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To oversee the risk management process and ensure that risks are effectively managed.
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