What is Risk Management?
Risk is part of all our lives. As a
society, we need to take risks to grow and develop. Effectively managed risks
help societies achieve more. In our fast paced world, the risks we have to
manage evolve quickly. We need to make sure we manage risks so that we minimize
their threats and maximize their potential.
adventurer manager says Risk management involves
understanding, analyzing and addressing risk to make sure organizations achieve
their objectives. So it must be proportionate to the complexity and type of
organization involved. Enterprise risk management (ERM) is an integrated and
joined up approach to managing risk across an organization and its extended
networks.
Because risk is inherent in
everything we do, the type of roles undertaken by risk professionals are
incredibly diverse. They include roles in insurance, business continuity,
health and safety, corporate governance, engineering, planning and financial
services.
IRM’s mission is to build excellence
in risk management, in all sectors and across the world.
How Do Investors Measure Risk?
Investors use a variety of tactics to
ascertain risk. In some cases, they look at the average return of an
investment, and they find its average standard deviation over the same time
period. Then, they apply a bell curve to that number, which dictates that the
expected return of the investment is likely to be one standard deviation from
the average two-thirds of the time and two standard deviations from the average
deviation 95% of the time. This helps investors evaluate risk numerically. If
they believe that they can tolerate the risk, financially and emotionally, they
invest.
What Is Enterprise Risk Management?
Enterprise risk management (ERM)
encompasses all kinds of risks throughout an organization, and it creates plans
for managing that risk. Industries such as aviation, construction, public
health, international development, banking, finance and insurance utilize ERM.
People who work with ERM focus on assessing the risks relevant to their
companies or industries, prioritizing those risks, and making informed
decisions to mitigate them.