Risk Management

Definition

Risk can be defined as the effect of uncertainty on one’s objectives (Professional Evaluation and Certification Board, 2019). Risk management includes the process of identifying, assessing, and prioritizing risks, as well as the coordinated and economical use of resources to minimize, monitor, and control the probability or impact of risks. Risk managers study a wide variety of risk types, including uncertainty in financial markets, threats from project failures, legal liabilities, credit risks, accidents, natural hazards and disasters, terrorist attacks, and events with uncertain or unpredictable origins. Risk managers study both negative events, classified as risks, and positive events, classified as opportunities (“Risk Management,” 2018).

Risk management is not always recognized as a stand-alone academic discipline, and thus, related programs are often housed in other academic departments, such as business schools (Beck, 2004, p. 13-21). One of the primary challenges of risk management is that the methods, definitions, and goals used vary widely according to the analytical context (for example, project management, security, engineering, industrial processes, financial portfolios, actuarial assessments, or public health and safety) (“Risk Management,” 2018).

Subdisciplines

Risk management encompasses numerous subdisciplines and specialized subfields, including financial risk management, which considers credit risk, regulatory risk management, market risk and pricing, and operational risk, as well as various kinds of business risk management, including strategic, compliance, financial, operational, environmental, employee, political, and societal risk management (Bizzo, 2017).

In Practice

Risk managers identify, measure, and evaluate different types of risks that can affect human activity. Once potential risks are identified, risk managers evaluate the impact of these risks and devise strategies to minimize, eliminate, or transfer such risks.

In Disaster Research

According to the World Health Organization, disaster risk management is defined as:

The systematic process of using administrative decisions, organization, operational skills, and capacities to implement policies, strategies and coping capacities of the society and communities to lessen the impacts of natural hazards and related environmental and technological disasters. This comprises all forms of activities, including structural and non-structural measures to avoid (prevention) or to limit (mitigation and preparedness) adverse effects of hazards. (Laroche & Etienne, 2008).

Disaster risk management uses a suite of social processes to design, implement, and evaluate strategies to improve understanding, foster disaster risk reduction, and promote improvements in preparedness, response, and recovery efforts (Intergovernmental Panel on Climate Change, 2012). In addition, disaster risk managers are often tasked with disaster risk reduction, which aims to reduce disaster risks through systematic efforts to analyze and reduce the causal factors of disasters (U.N. Office for Disaster Risk Reduction, 2018). This requires disaster risk managers to understand risks and the choices that can alleviate or compound the negative outcomes associated with those risks.

References

Beck, M. (2004). Obstacles to the Evolution of Risk Management as a Discipline: Some Tentative Thoughts. Risk Management, 6(3), 13-21. http://dx.doi.org/10.1057/palgrave.rm.8240186

Bizzo, G. C. (2017). ​8 Types of Risk Management. Equities.com. Retrieved August 29, 2018, from https://www.equities.com/news/8-types-of-risk-management

Intergovernmental Panel on Climate Change. (2012). Summary for Policymakers. In: Field, C. et al. (eds). Managing the risks of extreme events and disasters to advance climate change adaptation. a special report of working groups i and ii of the intergovernmental panel on climate change (pp 1-19), Cambridge: Cambridge.

Laroche, E., & Etienne, C.F. (2008). Integrating Emergency Preparedness and Response into \ Undergraduate Nursing Curricula. Retrieved from https://apps.who.int/iris/bitstream/handle/10665/70069/WHO_HAC_BRO_08.7_eng.pdf;jsessionid=39795200225C4326149D0F87CC1A2637?sequence=1

Professional Evaluation and Certification Board. (2016). Risk Assessment Importance in Different Disciplines. Retrieved February 16, 2019, from https://pecb.com/article/risk-assessment-importance-in-different-disciplines

U.N. Office for Disaster Risk Reduction. (2018). What Is Disaster Risk Reduction? Retrieved August 29, 2018, from https://www.unisdr.org/who-we-are/what-is-drr

Risk Management. (2018). In Wikipedia. Retrieved August 29, 2018, from https://en.wikipedia.org/wiki/Risk_managementAboutResearch NetworksResourcesDataCommunicationsContact