The management of risk provides rigout for all organizations in decision making at the various levels of management. Managing risks not only reduces uncertainties in business development for achieving the strategic objectives and effectively performing the operations, but also means they are prepared to manage and minimize the effects of accidents, disasters and faults in technical systems as well as response to and recovery from major disruptive risks.
− One origin of risk management was the insurance industry, but previously the engineering sciences were involved much more deeply in risk analysis and risk treatment with their involvement in aviation, space, nuclear and military industries. A variety of highly complex methodologies for risk assessment were created in order to improve system safety and functionality.
− Some of these tools have been in use since that time, especially fault- and event-trees, hazard analysis, failure mode and effects analysis and others. Safety aspects are still predominant, especially in the early application of risk management in respect of insurable losses such as, fire safety, work safety, product safety etc. Are still issues of concern.
− However, the earlier safety oriented risk management has today extended its application to enterprises and organizations as a part of a comprehensive management approach to maximize opportunities and minimize threats.
− The management of ris is not a “common sense methodology”, but a management philosophy and a management instrument that encourages the application of risk management process and methodologies to public and private organizations both large and small.
− Today's most vibrant industries and organizations understand that doing business in this dynamic marketplace demands highly trained managers, equipped to handle the challenges of an ever-changing, fast-paced, business environment. This has encouraged the development and expansion of the skills that are needed to survive the complexity and uncertainty which is faced in an increasingly competitive world.
− Effective management of risk should ensure survival, sustainability, continuity, stability and reliability for any organization. It is closely linked to business continuity management and to compliance management.
− Contemporary management of risk facilitates the knowledge needs of directors and top management of companies and government entities to ensure survival and sustainability in all activities concerning decision making on the management level.
− Just as the management of risk has reached these new levels of maturity, businesses have been confronted by demands for more accountable corporate governance. In order for corporate governance to be effective, it must be supported by a rigorous risk management process and a strong risk management framework within its management system. Risk management identifies the controls needed, while internal audits provide the assurance that they are being observed and are efficient.
− Corporate governance is the glue that holds an organization together in pursuit of its objectives, while risk management provides the resilience, and independent audit the assurance.
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