This can be done by Risk Identification, Risk Analysis, Risk Control, Risk Financing and Claim Management.
Risk identification is exactly what it means, it is about identifying various risk involved. Think about driving a car. The risks involved in driving a car is that a collision can occur, there could be mechanical failures, and there are financial risks involved as well.
Risk analysis, in the broad sense, is about asking the question: ‘What’s the worst that could happen?’ Going back to the analogy of driving a car, the worst thing that could happen whilst driving a car is the loss of life, either your own or someone else’s.
Risk control is three-fold. Firstly, you need to consider how to avoid the risk in total (you could choose not to drive a car. Secondly, how do you prevent a risk from happening (obeying traffic regulations and adhering to speed limits). Finally, how do you reduce the severity of the risk, while it is happening (wearing a seatbelt, having well maintained breaks and proper air bags)
Risk financing is everything monetary. It is concerned about reducing financial loss due to a risk happening. This usually involves some form of insurance, but is not limited to only insurance.
Finally, claims management asks the question of how do you recover financial losses from a risk, even after risk financing has taken effect.
For more information, please visit the ATG Website
