Risk management is the process of figuring out the risks in a certain situation, and hence reducing the possibility of its occurrence. In some cases, the amount of risk that is acceptable is nil, whereas sometimes it can be higher. These risks could be due to natural causes such as accident or even deliberate attacks.
In the corporate world, risk management is an organized activity that reduces uncertainty in the business. However, there are procedures that must be followed by people who are responsible for this risk management task in order to reduce the risk as much as possible.
In the public sector, risk management is used to figure out where the risks for the public and basic infrastructure lie and what measures should be taken in order to reduce or to avoid it at all. However, to be able to do this, in both the corporate and the public sector, following steps are to be taken.
Firstly, it is necessary to figure out which are the most important things that need protection. Then the threats to these must be understood after which it is important to understand the likelihood of each threat, which could possibly turn into reality. Once the likelihood is determined, the risk factor can be calculated. After the risk has been calculated, people who work on risk management can easily figure out ways to reduce the risk and prioritize the risk reduction measures based on strategy that is developed. These strategies can include transferring the risk to another person, avoiding the risk completely, taking measures to reduce the impact of the risk, or accepting the consequences of the risk.
