Risk is the effect of uncertainty on the achievement of objectives, and Risk Management is for those who want to understand the uncertainty involved in achieving their objectives and who want to manage their risks so as to ensure a successful outcome.
If Risk is defined as the "probability or threat of a damage, injury, liability, loss, or other negative occurrences that may be neutralized through pre-mediated action", then Risk Management according to ISO 31000 is exactly that pre-meditated action that reduces risk to an acceptable minimum. It regulates the requirements of the risk management process and introduces the methodology of risk analysis.
Risk Management covers risks, both operational and strategic in nature, with a special focus on their interaction and development over time. It is a tool for companies and any business sector that would like to use their management system to identify and analyze risks at an early stage, in order to make them controllable. The implementation of Risk Management increases both the awareness of risk and of opportunity, and their pro-active approach helps to ensure positive business development in the future. Thus the management of risk is woven into the organizational fabric and culture across the organization.
Risk may be a driver of strategic decisions and the effective management of risk when embedded in the activities of the organization may mitigate the uncertainty.
An enterprise-wide approach to risk management enables an organisation to consider the potential impact of all types of risks on all processes, activities, stakeholders, products and services.
This approach will enable a risk management initiative to deliver outputs, including compliance with applicable governance requirements, assurance to stakeholders regarding the management of risk and improved decision- making. The impact or benefits associated with these outputs include more efficient operations, effective tactics and efficacious strategy. These benefits need to be measurable and sustainable.
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