Risk management

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Risk management is the process of identifying, assessing and responding to financial, legal, strategic and security risks to an organization’s capital and earnings. These  risks arise from various sources such as internal operational issues, financial resources, competitors, cyber security threats, natural disasters, government and regulatory decisions and many other factors.

Many risks require an organisation-wide response to them while some need a specific response from a relevant business function but generally the finance department will have an important role to play in ensuring risk management is appropriately addressed because of the significant impact it has on the finances of the business.

Risk assessment evaluates the likelihood of a risk event occurring and the potential impact.  Some external risks have to be accepted or insured against while some internal risks can be addressed through internal processes and procedures.