Risk management is the process of identifying, evaluating, and prioritizing risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities. Risks can come from various sources including uncertainty in international markets, threats from project failures, legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause. There are two types of events, negative events can be classified as risks while positive events are classified as opportunities. Risk management standards have been developed by various institutions, including the Project Management Institute, the National Institute of Standards and Technology, and IBM.
Risk management is the continuing process to identify, analyze, evaluate, and treat loss exposures and monitor risk control and financial resources to mitigate the adverse effects of loss. Loss may result from various sources including enterprise risk management, which expands the province of risk management to define risk as anything that can prevent the company from achieving its objectives. Although accidental losses are unforeseen and unplanned, there are methods which can make events more predictable. The more predictable an event, the less risk is involved since the occurrence can be prevented or mitigated, or at minimum, expenses can be estimated and budgeted. It is this process to make loss more predictable that is at the core of insurance programs. The key to an economical and efficient risk program is control over the risk management functions with assurance that actions performed are desirable, necessary, and effective to reduce the overall cost of operational risk.
A successful risk management program helps an organization consider the full range of risks it faces. Risk management also examines the relationship between different types of business risks and the cascading impact they could have on an organizations strategic goals. This holistic approach to managing risk is sometimes described as enterprise risk management because of its emphasis on anticipating and understanding risk across an organization. In addition to a focus on internal and external risk threats, enterprise risk management emphasizes the importance of managing positive risk. Positive risks are opportunities that could increase business value or.
In healthcare, risk management comprises the systems and processes employed to uncover, mitigate, and prevent risks in healthcare institutions.
