Risk is a concept that denotes the potential negative impacts to some characteristic of value (present value of cash flow expected to be generated into perpetuity) that may arise from a future event. In other words "Risks are events or conditions that may occur, and whose occurrence, if it does take place, has a harmful or negative effect". In general risk is probability of risk occurrence multiplied by impact of risk occurrence. Fig. 1 shows various sources associated with the risks.
Essence of risk management
Risk management is a scientific approach to the problem of dealing with the pure risks faced by individuals and businesses which is defined as "the identification and assessment of the collective risks that affect firms value, and the implementation of a firm wide strategy to manage those risks".
Risk management is also a central part of any organisation's strategic management. It is the process whereby the organisations methodically address risks attaching to their activities with the goal of achieving sustained benefit within each activity and across the portfolio of all activities.
About the Authors:
The authors are associated with the Department of Textile Technology, Bannari Amman Institute of Technology Sathyamanglam