Short definition: Risk management is the process of identifying, assessing, and prioritizing risks, and then taking steps to mitigate or control those risks.
Explanation: It is a proactive approach to dealing with uncertainty and potential losses. Risk management involves analyzing the likelihood and impact of various risks, developing strategies to minimize their negative effects, and implementing those strategies to protect an organization or individual’s assets and interests.
Example: A company might identify the risk of a natural disaster disrupting its operations and implement a risk management plan that includes purchasing insurance, developing a business continuity plan, and diversifying its supply chain.
Additional information (optional): Risk management is an ongoing process that requires continuous monitoring and adjustment as new risks emerge or existing risks change. Effective risk management helps organizations and individuals make informed decisions, protect their assets, and achieve their goals.