Risk Management is defined as a rigorous and coordinated approach to assessing and responding to all risks that affect the achievement of an organization's strategic and financial objectives.

The risk management function has historically addressed what can best be described as "traditional" insurable risks. These are insurance coverages that are normally purchased from established insurance carriers and include such risks as fire, property, workers' compensation, general liability, and auto. Other "non-traditional" risks, such as financial risks which include product and service pricing, interest rates, and business risks such as asset utilization and inventory procurement are usually the focus of finance/treasury and operations respectively. However, from a risk management perspective, this approach lacks the ability to measure risks on a common basis, assess the interrelationship between the risks and analyze the potential impacts of these risks across an organization. To pursue these interrelationships, the concept of risk management has changed dramatically over the past several years to include risk which were once thought outside the realm of insurance and risk financing.