9.4.2 Why risk should be managed

There are two types of risk management:

  • Traditional - risks arising from physical and legal issues - natural disasters, accidents, lawsuits.
  • Financial - where risks are financial and can be managed using financial techniques.

More and more often, however, technology can result in financial risks and protective measures have to be taken (firewalls, secure servers, anti-virus software etc.).

EXAMPLE: Please list the five main risks for your business -
Risk management as a process includes the following elements:

  • Preparation of a risk management plan
  • Allocation of responsibilities.
  • Understanding the character and responsibilities of everyone involved in the plan
  • Cost estimation of the planned measures and budget forecast
  • Monitoring and assessment of measures
  • Implementation of recommended changes.