Risk management strategies are generally designed to do one of four things: 1. avoid the risk; 2. transfer the risk outside the business; 3. control the risk within the business or 4. accept the risk as a part of doing business.

One of the main benefits of a strategy is that it forces you to identify what you are trying to accomplish, to think about how you will measure progress, and how you will evaluate how well the strategy is working overall.

Results are important, but even good risk management strategies don’t come with guarantees. Strategies can fail for a number of reasons. Sadly, one of the most common reasons strategies fail is the lack of commitment to the strategy across time.

The Evaluating Risk Strategies course is available free of charge at RightRisk.org > Courses.

 
Risk is uncertainty that matters. Future events are unknown to us due to two, separate and distinct factors.

Variability means alternatives or different outcomes in the future purely due to the effects of chance. As a result, this type of change or variation in results cannot be reduced by further study or by any type of measurement.

Uncertainty refers to our lack of knowledge about the future. Some refer to uncertainty as ambiguity. This can even represent our lack of clarity about the meaning of current events and what it may imply for future outcomes.

One of the biggest hurdles to good decision making is the separation of variability and uncertainty. Insights into the alternatives available can be gained where the manager is able to sort the unknown future into variability and uncertainty.

Risk management can be generally defined as taking deliberate action to shape the variability of the outcomes, the consequences, or both for any management decision that might be made.This is accomplished by applying one or more risk controls.

A list of common risk controls is available at RightRisk.org, including links to alternatives for managing the five sources of risk: Market, Production, Institutional/Legal, Human, and Financial Risks. For more information, see RightRisk.org > Resources > Risk Controls.