THE RISK MANAGEMENT PROCESS

Basic Structure for Decision-Making:

1. IDENTIFY the exposures (risks) - sources:

   • company operations (dynamic)
   • leases, contracts, and other agreements
   • legal environment (dynamic)
   • insurance policies (what is not covered)

2. ANALYZE the exposures

   • how likely to occur?
   • how severe an impact?
     • to the company?
     • to the individuals?

3. SELECT the technique (or combination of techniques) that will most effectively handle each exposure - alternatives:

   • avoid the risk
   • control the risk
   • transfer the risk to another contracting party
   • transfer the risk to an insurance company
   • retain the risk

4. IMPLEMENT the selected technique(s)

5. MONITOR the treatment for effectiveness, and the exposures for change; implement revisions where appropriate

6. IDENTIFY and ANALYZE the exposures . . . (ongoing process)