The risk management process usually includes these steps:
Risk Identification: Identifying potential risks that may be encountered. These risks may be financial, operational, strategic, legal or environmental.
Risk Assessment: Analyzing identified risks and evaluating the likelihood and potential impact of each risk. This step helps understand how serious the risk is.
Risk Prioritization: Ranking the assessed risks according to their severity. The highest priority risks are addressed first.
Developing Risk Responses: Developing strategies to manage risks. These strategies may include avoiding the risk, reducing the impact of the risk, accepting the risk, or transferring some of the risk to another party (for example, obtaining insurance).
Risk Monitoring and Control: Monitoring the effectiveness of applied risk management strategies and making adjustments when necessary. This is an ongoing process and is reviewed regularly.
