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Risk management is a system that includes management strategies and tactics to achieve key business goals. The purpose of risk management in the field of economics is to increase the competitiveness of economic entities by protecting against the implementation of net risks (Segal, 2022). Risk management in an ideal organization should be integrated into all processes and should be an integral part of any decision-making process. In practice, a separate unit often carries out risk management, which leads to its detachment from key business processes. Risk management should be carried out at different levels of management this will allow the company to best control risks and take preventive measures. That is why risk management should be an integrated, not an independent, system within the organization.
The greatest attention to risk management should be paid when making decisions on the most critical issues for the development of the organization. This is to be implemented in strategic planning and changes in company policies, in implementing new projects, processes, and procedures before significant financial investments or optimization activities. From the practical point of view, risk management can be divided into areas of its application, which correspond to all possible areas of the organization (Duggan, 2019). Among these are strategic and operational planning, budgeting; resource planning, and asset management; changes in organizational business processes related to technology or management; research and development; environmental risks. Risk management strategy is the art of dealing with a versatile range of possible issues of the enterprise in uncertain economic situations, which is based on forecasting risks and implementing methods to reduce them. The balance between risky practices and potential positive outcomes is a golden rule of risk management (Moerk & Studdert, 2021). For instance, environmental risk can be accepted if the company and the whole market will benefit from the related practice in the long run.
References
Duggan, T. (2019). Why is risk management important to project success? Chron. Web.
Moerk, B., & Studdert, J. (2021). Environmental risk management during COVID-19. Clyde & Co. Web.
Segal, T. (2022). Common methods of measurement for investment risk management. Investopedia. Web.
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