Risk management and Risk types

This article answers following queries:

·         What is risk?

·         What is risk assessment?

·         What is risk management?

·         Define risk or risk assessment or risk management

·         What are the types of risk in ITIL?

 

A Risk is nothing but “Uncertainty of outcome”

Risk Assessment means the process of

ü  Identification of risks

ü  Assessing threats and vulnerabilities

ü  Quantifying the impact and probability of risk occurrence

ü  Developing mitigation strategies

 

Risk Management means setting up a process to

·         Monitor Risks

·         Obtain reliable up-to-date information about risks

·         Control risks

·         Enable decision making

 

Risk Types:

There are four main types of risks.

§  Strategic Risk: These types of risks pose threat to the strategy of the organization. Ex: A new competitor enters to market with a new strategy

§  Financial Risk: These types of risks occurrence due to financial aspects. Ex: Non-paying customers, Risk in interests on bank loans obtained etc.

§  Operational Risk: These types of risks results from impact caused to operations

§  Ex: Non-functioning or damage to key production equipment

§  Compliance & Regulatory Risk: These types of risks occur due to compliance and regulation aspects. Ex:  Modification to existing rules leading to risk to organization, introduction of new laws or rules impacting existing business setup