Management of Risk, Second Edition†
1.1 PURPOSE OF THIS GUIDE
This guide is intended to help organisations put in place an effective framework for taking informed decisions about the risks that affect their performance objectives across all organisational activities, whether these be strategic, programme, project or operational.
It provides a route map for risk management, bringing together principles, an approach, a set of inter-related processes and pointers to detailed sources of advice on risk management techniques and specialisms. It also provides advice on how these principles, approach and processes should be embedded, reviewed and applied differently depending on the nature of the objectives at risk.
1.2 WHAT IS RISK?
In this guide `risk' is defined as `an uncertain event or set of events which, should it occur, will have an effect on the achievement of objectives'. A risk consists of a combination of the probability of a perceived threat or opportunity occuring and the magnitude of its impact on objectives. Within this definition `threat' is used to describe an uncertain event that could have a negative impact on objectives or benefits; and `opportunity' is used to describe an uncertain event that could have favourable impact on objectives or benefits.