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.
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