The term “risk management” has a variety of meanings to different individuals depending upon their own sphere of activities. It can range widely, from the protection of physical assets to the prevention of injuries or reduction of potential liability’s, limiting the impacts of commercial business and investment decisions, to the use of complex financial instruments in the management of currency risks.

It is important therefore to define “risk management” in plain English, provide an overview of the risk identification and risk management process, and show how insurance should fit into that process.

The Australian/New Zealand Standard on Risk Management (AS/NZS 4360) provides a general framework and definitions which are particularly relevant:

RISK
“The chance of something happening that will have an impact upon objectives. It is measured in terms of consequences and likelihood”

RISK MANAGEMENT
“The systematic application of management policies procedures and practices to the tasks of identifying, analyzing assessing, treating and monitoring risk”.

Another simple definition for risk management is “the identification, measurement and economic control of those risks that threaten the assets or earnings of, or the essential services provided by an organization”, or what can go wrong how can it go wrong and what can be done about it before it does.

With the many tools that are available to us and to our clients, we can assist our clients to become risk averse and financially secure.

Risk Management Defined | Why Risk Management? | Risk Management Tools | Risk Identification and Evaluation
Evaluation and Quantificaion | Avoiding, Reducing and Controlling Risk Exposures