Risk management is the identification, assessment, and prioritization of risks and the subsequent coordinated and economical application of resources to minimize, monitor and control the probability and impact of losses. Effective risk management activities create value and should be an integral part of the decision-making process. How does risk management impact your bottom line?
Strategies for addressing an identified risk typically include two of the following:
Can you eliminate a service or activity considered too risky?
-Eliminate activities that involve risk
-Avoid creating activities that involve risk
-Relatively extreme approach
-Mitigation or Prevention: What steps can be taken to reduce the likelihood of losses occurring or lessen the impact of losses should they occur?
-Manage liability by structuring activities and programs in ways that reduce or limit institutional risk
– Risk Transfer: Can we transfer either the risk or financial consequences of a loss to another party?
-Releases and waiversAccept the risk as it is – some risk is inherent in the activities of operation.
-Deciding not to purchase an insurance policy for a specific exposure