What is risk management by definition?
The term "risk management" is defined by Wikipedia as follows: "Risikomanagement ist die Tätigkeit des Umgangs mit Risiken. Dies umfasst sämtliche Maßnahmen zur Erkennung, Analyse, Bewertung, Überwachung, Steuerung und Kontrolle von Risiken."
The goal of risk management should be to minimize, shift or completely avoid risks.
The risk management process
The basic pillars of a successful risk management process are first the identification of a risk, followed by the stages of a (sequential) risk management process listed below:
- Risk identification
In risk identification, the goal is to identify risks that exist at the present time or that may exist at a later time. - Risk analysis
In risk analysis, the percentage probability that a loss or disadvantage will occur is calculated. Different types of analysis such as financial analysis or vulnerability analysis can be applied. - Risk prioritization
Risk prioritization involves ranking risks based on the threat, feasibility or urgency. This allows existing resources to be used with the greatest possible efficiency. - Risk treatment
Every effective and efficient risk treatment requires a risk treatment plan in which the required funds, the time frame and responsible persons in risk management are defined. The plan must show which goals are to be achieved. - Risk monitoring
Risks are often not constant, but change in terms of significance. This creates the need for risk monitoring in order to be able to reassess the risks. If monitoring reveals the need to adjust the risk situation, the risk must be reassessed. - Risk reporting
In risk reporting, the risk status is to be reported based on the risk monitoring. The report can refer to a changed risk or discuss a completely new risk. The use of digital platforms can significantly simplify and facilitate the risk management process.
The use of digital platforms can significantly simplify and facilitate the risk management process.
Our risk management software: smartLCM Risk Management
With the risk management software smartLCM you manage all risk management tasks, digitally, easily and transparently.
Interested in an no-worry all-inclusive package for your digital transformation?
