An Overview of Risk and Risk Management

This note was developed to summarize how some managers and firms are approaching risk management, and to provide a risk assessment tool that can be used to complement current risk management frameworks. Leaders are compensated and operate in conditions of risk. The risk assessment tool is based on: identification, information, interests, incentives, and infrastructure.

The note was developed to provide participants with an integrated framework to identify and manage risk. It clearly shows that risk is endemic to business activities but needs to be managed in a strategic manner. It also points out that risk management has strategic, operational, and tactical dimensions and is much broader than the volatility dimensions of risk stressed in financial management.