Risk management is the act or practice of controlling risk. Most businesses re very interested in understanding the ways to control risk. This has created a secondary industry focused on mitigating risk and providing management information that allows business to gain from the knowledge of others who are successful in mitigating risk. As a result there are many trade journals dedicated to risk management information and news. In a constantly changing business environment such news is critical to many companies in taking action to prevent future losses.
This process includes identifying and tracking risk areas, developing risk mitigation plans, monitoring risks and performing risk assessments to determine how risks have changed. Depending on the types of risk involved, it can be further split up into operational, credit and market risk management.
Fierce competition and the widening of consumer bases have encouraged companies to take a greater risk. The concept of ‘no risk no gain’ has taken on a new meaning with the introduction of risk management. Modern companies have the confidence to deal with risks head on and are keener on mitigating rather than avoiding risks.
Businesses have learned to involve more business-focused managers than IT security professionals into their risk management goals. Employees, who understand the complexities of business, are capable of contributing a lot towards risk management. Increasing regulatory pressures has forced companies to expand their risk management teams.
Companies are turning to IT and software to better understand, evaluate and manage these various types of risks. According to a recent survey from Forrester Research, 62 percent of CIOs indicated they already had a company-wide initiative focused on enterprise risk and compliance management.
Most risk management software packages are equipped with tools to help manage product design and manufacturing operations. These help in cutting costs and building quality. They provide standard database functions to add and delete risks, as well as specialized functions for prioritizing and retiring project risks. Each risk can have a user-defined risk management plan and a log of historical events. The tools derive cost, schedule, labor and materials estimates by assessing the interaction and impact of product, organizational and even operational variables.
Many companies are turning to a detailed study of latest trends and tools in the market to prepare themselves for sharper risk management in their businesses.