What Is Risk Management?

In the financial industry, risk management is centered on managing exposure to credit and market risk by discovering its sources, and then contingency planning and mitigating. From a global standpoint, like global warming and economic stability of under-developed nations for instance, distinctive risk management principles might be needed.

You will find orm risk management principles which will apply to more or less all industries. Such principles are seen as the "foundation" of risk management. They consist of global view, communication, proactive approach, information, integration and continuous process.

Global view means viewing all risks holistically relative to what's transpiring around the world. Communication means communicating with all stakeholders to be sure a good understanding is achieved on all facets of the risk under consideration. This is really important simply because risks are generally looked at diversely by differing people. 

The proactive approach principle is important because risk management is predicated on foreseeing and planning for risks before they take place. The information principle refers to understanding just about everything there is to be familiar with about a risk. 

Risk management strategies must be included in day-to-day business operations to make certain risks are prevented, mitigated and appropriately planned for constantly. The final principle is referred to as a continuous process. You need to constantly apply and evolve risk management activities day-by-day.