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Risk management is the process of identifying, assessing and controlling financial, legal, strategic and safety risks to a company's capital and earnings. These threats, or risks, can come from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters.

If an unforeseen event catches your company unawares, the impact may be minor, such as a small effect on your overheads. In the worst-case scenario, however, it can be catastrophic, with serious consequences such as a significant financial burden or even the closure of your business.

To reduce risk, a company must implement resources to reduce, monitor and control the impact of negative events, while optimizing positive ones. A consistent, systemic and integrated approach to risk management can help determine how best to identify, manage and mitigate significant risks.