Despite the fact that risk management can involve sophisticated techniques— especially in the financial services industry, where a small miscalculation can result in devastating losses—conceptually it is a rather straightforward process: You identify what could go wrong and work to lesson or otherwise deal with those risks.
Breaking risk identification down into its simplest elements, companies can classify risks into three categories: past problems that damaged the company, risks that tripped up competitors or other peers, and risk events that have yet to occur, but would wreak havoc if they did.
