Fundamentals of Risk Management

Risk management allows you to take thoughtful risks.

Practicing risk management doesn’t eliminate or avoid all risk; it helps you assess and manage it. Life entails taking many risks. Risk management is a way of thinking that enables you to take only rational risks after considering an action’s potential costs and benefits.

Risk management doesn’t concern only remaining safe on the job. Everyone spends time trying to stay safe at work. For that reason, the five-step risk management process below fits nicely into most safety protocols. Risk management proves equally valuable in daily life. It allows you to assess the upsides and downsides of situations, and gives you a chance to insulate yourself against the worst consequences if something goes terribly wrong.

Risk management has four principles: Don’t take pointless risks, take risk only if you’re the right person to do it, always manage risk and always apply risk management thinking.

Risk management’s first guiding principle is that you should never take pointless ...