Risk management is the identification and prioritization of risks followed by coordinated and economical application of resources to reduce, check and control the likelihood and impact of adverse events or to maximize the awareness of opportunities. Risk management’s objective is to guarantee that indecision and hesitation does not repel the effort or attempt from the business goals.
Risks can originate from various sources: e.g., uncertainty in financial markets, threats from project failures, legal liabilities, credit risk, natural disasters, accidents, as well as from uncertain or unpredictable events. Methods, definitions and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, financial portfolios, actuarial assessments, or public health and safety.
Strategies to manage threats (uncertainties with negative consequences) typically include avoiding the threat, reducing the negative effect or probability of the threat and even retaining some of the potential or actual consequences of a particular threat.