The term “risk management” first appeared in scientific and management literature in the 1920s. It was not until the 1950s that it became an actual science and became a discipline within itself. Most risk management research was related to insurance and finance. But more recently, it has gained popularity among scientists and business professionals alike. In this article, we’ll examine what risk management is and what it means for organisations. We’ll also explore some of the advantages and disadvantages of risk management.
The first step in risk management is defining a risk and then determining how to deal with it. Risk management is a process that involves identifying and analyzing risks, defining strategies for mitigating them, and making sure the plan reflects these strategies. The next step is assigning a responsible person or team to deal with the risk. For financial businesses, part of the risk is who to lend money to safely. Important identity checks must be made and these should include those outlined in the KYC process. Find out more at https://www.w2globaldata.com/regulatory-compliance-solutions-and-software/know-your-customer/
While many processes were developed without risk in mind, they are still critical to a successful risk management process. The context establishes the basis for risk evaluation. Risks are events that have consequences. They can arise from many sources. These sources can be internal or external to the system under consideration, such as a company’s employees or the current state of the economy, for example. And the risks themselves can be either positive or negative. In any case, the key is to understand the context and the risks for each individual business.