- Risk management is the process of evaluating the chance of loss or harm and then taking steps to combat the potential risk.
- An example of risk management is when a bank employee reviews a potential loan to determine what the chances are that the buyer won't pay it back in order to decide how to proceed with granting the loan and how much to charge in interest.
- An example of risk management is when a person evaluates the chances of having major vet bills and decides whether to purchase pet insurance.
The American Heritage® Dictionary of Business Terms Copyright © 2010 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.
Identifying potential risks and making decisions so as to reduce the possibility and/or impact of the risks. For example, an investor attempts to reduce risk by choosing conservative investments or assembling a diversified portfolio. Businesses sometimes use futures contracts to avoid risk in the foreign exchange market. Household products companies try to avoid major mistakes by introducing new products in test markets.
risk management - Computer Definition
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risk management - Legal Definition
The process of assessing risk and acting in such a manner, or prescribing policies and procedures, so as to avoid or minimize loss associated with such risk.