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Risk Management
Find expert resources and tools to help you better manage your business risk.
Risk management attempts to deal effectively and efficiently with identified risk so the organization can focus on the core business areas. Examples of risk management include such things as business insurance designed to compensate a business in case of some type of legal, financial or even physical disaster. Effective risk management is the cornerstone of successful business management. A well-designed risk management program allows management to use financial and human capital to pursue the business vision, unhindered by the need to maintain high reserves to cover potential losses.
Risk management can be thought of as a two part process. First, a firm needs to determine what risks exist in an investment or business operation and then, second, handle those risks in a way best-suited to the investment objectives and risk tolerance of the firm. Risk management exists practially in all types of business and particularly in financial markets. Some common examples of risk management follow: when an investor buys low-risk government bonds over more risky corporate debt, when a fund manager hedges their currency exposure with currency derivatives, or when a bank performs a credit check on an individual before issuing them a personal line of credit, or when a firm buys fire insurance or commercial insurance for their fleet of vehicles. Firms undertake risk management to identify, measure and manage risk.