What is risk management?
Risk can be defined as the 'effect of uncertainty on objects'. Risk is important as it assists organisations in setting strategy, achieving objectives and making informed decisions. Taking risks is fundamental to organisations making profits and not-for-profits delivering the services to the community.
Recognising and managing risk is a crucial part of the role of the board and management. Oversight of risk management is the responsibility of the board. So it should regularly review and approve the risk management policies and frameworks. In this way the board decides on the nature and extend of the risks it is prepared to take to meet objectives.