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Understanding Risk Management

Effective risk management strategies a business can try to plan for unexpected events and can be ready to respond if they arise.

Step One is Categorizing Risk:
Before you can begin to manage risk, it can be helpful to segment your potential risks into categories for further definition and review. Typically, risks can be placed in one of three categories:

  1. Expected Risk. These are risks types that are a part of your industry standards, business, or simply part of “how things are”. For example, almost every business using electronic payments the danger lies in being hacked, losing customer credit or debit card information, or having funds misdirected by a criminal – or even by human error.
  2. Expect the Unexpected. These are risks that cannot be expected, but can be understood. For example, while the risk of a computer/network system being hacked is a known risk, it is unknown who will do it, where it will come from or the purpose of the hack.
  3. Inconceivable Risk. These risk types you only see in hindsight. Recent technology events that fit this class of risks include the “poodle’ and ‘heart bleed’ vulnerabilities. It is quite possible that many more of these unknown unknowns exist in the computer systems we rely on every day.

Best Practices:
With these three categories in mind, you can establish risk management practices for your business. When creating the original risk assessment, rank and rate each risk, its potential to occur and the greatness of its impact. From here, risk management policies can help you handle risks effectively, in a timely manner and quickly.

Recapping the Process:

Risk management is an important ongoing process. Once a policy is in place, a set of operating standards are needed to set expectations for the staff who deals with the risks. Processes establish the procedure for meeting requirements at the level set by standards. The following six steps briefly summarize the risk management process:

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Its Importance:

Risk management needs be an ongoing and integral part of your business management today, especially when processes involve money. It is important to have these processes tied to policies and standards, which creates a measurable and defined set of risk management capabilities. Finally, while all three are tied together, it is important to manage risk dynamically as the risk environment changes

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TouchSuite’s Case Studies

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