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🛡️ '''Risk management''' is the systematic process of identifying, assessing, mitigating, and monitoring threats that could adversely affect an organization's financial position, operations, or strategic goals. Within [[Definition:Insurance | insurance]], the term applies at two levels: insurers practice enterprise-wide risk management over their own business, and they also help [[Definition:Policyholder | policyholders]] manage risk through [[Definition:Policy | coverage]], advisory services, and [[Definition:Loss control | loss control]] programs. Both dimensions share a common logic — understand what can go wrong, quantify the potential impact, and choose the most efficient response.

🔧 The toolkit available to risk managers spans prevention, reduction, retention, and [[Definition:Risk transfer | transfer]]. Prevention and reduction strategies aim to lower the frequency or severity of [[Definition:Loss | losses]] before they happen — think fire suppression systems, employee training, or cybersecurity protocols. Retention means deliberately absorbing a portion of risk, often through [[Definition:Deductible | deductibles]], [[Definition:Self-insured retention (SIR) | self-insured retentions]], or [[Definition:Captive insurance company | captive insurers]]. Transfer shifts the financial burden to a third party, typically an [[Definition:Insurance carrier | insurance carrier]] or [[Definition:Reinsurer | reinsurer]]. A mature [[Definition:Enterprise risk management (ERM) | enterprise risk management]] program blends all four approaches, continuously stress-testing assumptions with [[Definition:Risk modeling | risk models]] and [[Definition:Scenario analysis | scenario analyses]].

🌐 Organizations that invest in disciplined risk management tend to experience fewer surprise losses and recover more quickly when disruptions do occur. For insurers specifically, robust internal risk management strengthens [[Definition:Solvency | solvency]], satisfies [[Definition:Regulatory compliance | regulatory]] expectations, and reassures [[Definition:Rating agency | rating agencies]] reviewing the company's financial strength. In an era of accelerating change — from [[Definition:Climate risk | climate volatility]] to [[Definition:Cyber risk | digital threats]] — proactive risk governance has moved from a back-office function to a strategic differentiator.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Enterprise risk management (ERM)]]
* [[Definition:Risk appetite]]
* [[Definition:Loss control]]
* [[Definition:Risk transfer]]
* [[Definition:Risk modeling]]
* [[Definition:Scenario analysis]]
{{Div col end}}

Definition:Risk management - Revision history

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