Risk management in the enterprise
Firstly, let’s define the term “risk management.” Risk management, according to the Encyclopedia of Management, is “decision-making and implementation of actions leading to the achievement of an acceptable level of risk by the entity.” Thus, it is a process that involves the diagnosis and control of risk, the purpose of which is to develop stable financial results and create conditions for the further development of the enterprise.
Individuals making business decisions should be aware of the risks that are associated with the decision. However, awareness alone is not enough, the entrepreneur should also know how the decisions taken can bring the right effect for the enterprise and how to minimize the risk of failure. An appropriately selected risk management system helps to identify risks early on and make the right decisions quickly, which may affect the success of the company. Every entrepreneur should remember that a risk cannot be completely eliminated, it can only be minimized. This is not an easy process; therefore, it is worth knowing how one should proceed with risk management and what stages it consists of.
The following video will answer basic questions about enterprise risk. Learn what enterprise risk is, the types of risks and how to manage them.
Video 1: What are Business Risk?
TIPS
- Develop an operational framework that fits the size, scope and complexity of your enterprise.
- Identify internal and external systems that are either critical to your operation.
- Create a risk assessment schedule
- Keep in mind that there are different categories of risk that may affect your enterprise.