What is risk management?

Risk management, also known as crisis management, refers to the management process of how to minimize risks in a certain risk environment. It includes risk measurement, assessment and emergency strategy. The ideal risk management is a series of prioritization processes, which give priority to the things that can cause the greatest losses and the most likely to happen, and postpone the things with relatively low risks.

But in reality, the optimization process is often difficult to decide, because the risk and the possibility of occurrence are usually inconsistent, so we must weigh the ratio of the two to make the most appropriate decision.

Risk management also faces the problem of effective use of resources. This involves the factor of opportunity cost. Using resources for risk management may reduce the resources available for incentive activities; The ideal risk management is to resolve the biggest crisis as much as possible with the least resources.

"Risk management" is a compulsory subject for western business executives who invested in China in the 1960s and 1990s. At that time, "risk management" was added to many MBA courses.

Risk management (risk management)

The process of weighing the benefits and costs of reducing risks and deciding what measures to take.

The process of determining the reduced cost-benefit trade-off scheme and deciding the action plan (including deciding not to take any action) becomes risk management.