What does risk management entail?

Risk management involves a systematic process aimed at identifying, assessing, and reducing the likelihood of adverse events affecting a business. A planned approach is crucial because it enables an organization to prioritize risks, develop strategies to mitigate them, and ensure that appropriate measures are in place to respond effectively.

By taking a proactive stance on risk, businesses can safeguard their assets, improve decision-making, and maintain operational continuity. This approach includes tools like risk assessments, audits, and contingency plans that help organizations minimize vulnerabilities and enhance resilience.

The other options do not capture the essence of effective risk management. For instance, simply taking on numerous risks would disregard the necessity of understanding and controlling them, leading to potential instability. Ignoring potential hazards represents a lack of foresight that could have dire consequences. Additionally, waiting for risks to materialize before reacting is reactive rather than proactive, which means an organization would likely face greater losses and challenges in managing situations effectively.