Risk management is an important sub-area of a company’s management that deals with the identification, assessment, and handling of risks. Risks are events or circumstances that can disrupt a company’s business operations and jeopardise or impair the achievement of business goals and results. The goal of risk management is to minimise or eliminate these risks in order to strengthen the company’s resilience and ensure sustainable business operations.
Effective risk management consists of three main processes: risk identification, and risk assessment (together, risk analysis), and risk handling. Risk identification involves the systematic recording and evaluation of all potential risks in the company. Risk assessment involves evaluating the potential impact and assessing the likelihood of these risks occurring. Risk handling refers to the implementation of measures to reduce and avoid risks.
A broad business continuity approach is an important aspect of risk management that ensures that a company is able to continue to fulfil its business purpose in a crisis situation. Business continuity encompasses all the measures a company takes to maintain continuous operations even in the event of disruptions or failures. This involves, for example, the rapid recovery of IT systems, ensuring communications, accessing to critical resources, sustaining supply chains, and minimising the impact on customers, employees, business partners, society in general, and the environment.
Well-designed and regularly updated risk management, based on a broad business continuity approach, is an important building block for the long-term and sustainable success of a company. It ensures that a company is prepared for potential crisis and can respond quickly and effectively to problems that that business can go on as usual.