Risk Management
Risk Management is the scientific approach of identifying and evaluating all the possible risks an individual or business entity may face and then to select systems and methods to either prevent or minimise the effect of the risks. It also includes the transfer of risks one is not prepared to carry for your own account to an insurance company who is prepared to take on the risk. Risk management is therefore a plan to minimise and deal with losses.
The aim of risk management is to calculate the likelihood of a loss taking place and the extent of the possible loss as well as the financial implications thereof. Every individual has the responsibility of risk management, for example if you own a car, part of your risk management will be to take car insurance.
Personal risk management will also include the steps you take to safeguard your car, such as always making sure your car is locked, never leaving valuable items in the car, installing safety devices such as an alarm, immobilizer or tracking device, keeping your car in a locked up garage overnight, always parking in safe places and driving responsibly to prevent accidents.
A Risk Manager is an individual who carries out the process of risk management. His role includes identifying potential risks, measuring the financial impact and implementing controls to eliminate and/or reduce the impact of the loss.