2 The importance of managing risk
Now watch Video 2 from the experts on why risk management is important.
Risk management is considered so important that many professional disciplines are encouraged to manage risks as part of their professional code.
As a good example take a look at the ‘Guidance on Risk’ set out by the UK’s Engineering Council (2011). The guidelines are as follows:
- Apply professional and responsible judgement and take a leadership role.
- Adopt a systematic and holistic approach to risk identification, assessment and management.
- Comply with legislation and codes, but be prepared to seek further improvements.
- Ensure good communication with the others involved.
- Ensure that lasting systems for oversight and scrutiny are in place.
- Contribute to public awareness of risk.
Indeed all UK companies listed on the Stock Exchange are expected to apply effective risk management as part of their compliance with the UK Corporate Governance Code.