From the course: Finance Foundations: Risk Management
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The risk management process
From the course: Finance Foundations: Risk Management
The risk management process
- When I talk to people about corporate risk, most of them want to immediately jump to a topic, like hedging, without knowing what their risks actually are. This is like buying racing stripes or spinning rims for a car you don't even own yet. You see, risk management starts not with answers, but with questions, and there are three big ones. What are your risks? What are you going to do about your risks? And is your strategy effective? Let's look at six steps of an effective risk management process. These include identifying your risks, measuring your risks, owning your risks, addressing your risks, implementing your risk management solutions, and finally, monitoring your risk management solutions. These six steps should answer our three big questions. So, what are your risks? As you start a risk management project, you need to make sure that you're solving for the right problem. This part of the risk management process…
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