Summary |
Risk in inherent in life. Risk is often associated with outcomes. Everyone must cope with it. Our decisions are made on our perceptions of risk. Risk is often equated with uncertainty. If something is certain to occur, there is no risk. We are risk averse. We always seek security.
There are three different sources of risk – operational, financial, and strategic. Operational risks include those risks that arise from the existence of an individual (internal risk) and from the operations of an organization (organizational risk). Financial risks arise from individuals’ or organizations’ ownership or use of financial instruments. Strategic risks stem from macroeconomic and other board societal influences and trends. It is important to note that an overlap exists between them. All individuals and business must deal with risk by an organized approach to risk-related decision –making- Risk management
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