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7 Steps of a Risk Management Process

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Risk management is the process of identifying and controlling potential losses. It is a standard business practice that is applied to investments, programs, projects, operations and commercial agreements. The following are common steps in a risk management process.


Giving all stakeholders an opportunity to identify risk. This can increase acceptance of a program or project as everyone is given a chance to document all the things that might go wrong. The diverse perspectives of stakeholders helps to develop a comprehensive list of risks. It is also possible to use databases of issues with that occurred with similar business processes, programs or projects in your industry. Knowledge sources such as lessons learned and the risk registers of historical projects can also be used.


Developing context information for each risk such as moment of risk.

Probability & Impact

Assessing the probability and impact of each risk. These can be single estimates such as high, medium and low. Alternatively, they can be a probability distribution that model multiple costs and associated probabilities for each risk.

Risk Treatment

Planning a treatment for each risk such as acceptance, mitigation, transfer, sharing or avoidance. Risks that are both low impact and low probability typically aren't treated.

Residual Risk

Assess residual risk including secondary risks that result from risk mitigation, transfer or sharing.

Risk Control

Implement identified controls for risk mitigation, sharing, avoidance and transfer.

Monitor & Review

Continuously identify new risks as things progress, monitor implementation of controls and communicate risk to stakeholders.
Overview: Risk Management Process
The process of identifying and controlling potential losses.
Related Concepts

Risk Management

This is the complete list of articles we have written about risk management.
Acceptable Risk
Business As Usual
Business Impact
Business Risks
Calculated Risk
Cascading Failure
Contingency Plan
Contingency Planning
Disaster Preparedness
Dread Risks
Economic Risk
Financial Risk
Innovation Risk
Investing Risk
Moment Of Risk
Plan Template
Political Risk
Positive Risk
Project Risk
Reputational Risk
Residual Risk
Resource Risk
Risk Acceptance
Risk Analysis
Risk Appetite
Risk Awareness
Risk Capacity
Risk Communication
Risk Contingency
Risk Control
Risk Culture
Risk Estimates
Risk Evaluation
Risk Exposure
Risk Impact
Risk Intelligence
Risk Management
Risk Matrix
Risk Measurement
Risk Mitigation
Risk Monitoring
Risk Objectives
Risk Prevention
Risk Probability
Risk Profile
Risk Reduction
Risk Register
Risk Response
Risk Sharing
Risk Taking
Risk Tolerance
Risk Treatment
Risk Trigger
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Special Risks
Strategy Risk
Tactical Risk
Technology Risk
Unknown Risks
Upside Risk
More ...
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