Risk in Business

Every business faces risks, and when appropriately handled, risks typically prove advantageous to businesses for both growth and profit. Risks are an ever-changing, fluid element to any businesses, so the constant evaluation and application of risk management methods is critical to the success of businesses. According to Douglas Hubbard, risk management is, "the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events." (2009). In other words, risk management is the practice of identifying risks and deciding how to handle, or whether to handle the risk at all.

There are five common types of risks that businesses face, each of which requires specialized evaluation and decision making. The first category of risk for businesses is strategic risks. Strategic risks are risks associated with operating in a specific line of businesses and...
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