Risk Management

Risk management is the process of identifying, assessing, and mitigating potential risks that could negatively impact an organization’s operations, finances, or reputation. It involves developing strategies to minimize the likelihood of risk events or reduce their impact if they occur. Risk management techniques include diversification, hedging, insurance, and contingency planning. Effective risk management helps organizations protect their assets, maintain profitability, and achieve long-term stability.

Example

A financial institution implements risk management strategies such as diversification and hedging to protect its portfolio from market volatility and potential losses.