What is Risk Management?

Risk has always been defined as the danger of a loss; it is the natural English usage for the term risk. If you look at wikipedia, you’ll find risk defined in six ways, all referring to negative consequences. In that sense, managing risk would mean doing one or more actions to prevent a loss.

According to the new, more technical definition described in ISO 31000, the meaning of risk has become much broader. In the vernacular, it can be defined as managing all uncertainties to promote the achievement of your objectives. In other words, risk is defined as any event that effect your objectives with either negative or positive consequences. You will find a more detailed explanation of the new definition for risk here.

Decision Making

The advantage that the new (albeit somewhat squeezed) definition is that risk management as a discipline is now one of decision-making. Because we all face uncertainties as to whether or when we will achieve our objectives, we manage them by making decisions in consideration of the possible effects. ISO 31000 teaches how to make these decisions effectively.

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