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Understanding and managing risk
Understanding and managing risk

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2.2 The risk management process

An organisation’s attitude towards the various forms of risk to which it is exposed should be a direct interpretation of its business strategy. This has implications both ways: the strategy itself must address the appetite and capacity for risk within the business and the systems and actions of the organisation regarding risk should seek to attain the goals envisaged by the strategy. This process of linking risk exposure and risk appetite to an organisation’s policy is known as risk mapping and is a key part of the risk management process. It can be divided into sequential stages, as outlined in Figure 2.

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(Source: adapted from Crouhy et al., 2005, p. 2)
Figure 2 The risk management process