You may not think too much about serious disasters. Most of us focus on the day-to-day chores of running our businesses and keeping revenues up. However, there are long term planning concerns that many firms just avoid. Those concerns are managing the risk to your business if something very bad happens. This long-term planning is called risk management and it is the dullest topic ever—until something bad happens.
Business school academics have varying definitions of risk and risk management, but for our purposes the concepts are fairly simple. Risk is the negative uncertainty that comes from any potential loss. Risk management is the collection of activities a business undertakes to mitigate, avoid, and transfer the losses that might damage the business due to some negative event. Risk management, now frequently referred to as Enterprise Risk Management, has been an area of business focus for decades. Businesses have long recognized that they need to look at the financial risks they might face if something happened to their physical assets or were confronted with major litigation. However, in the past few decades, there has been a stronger and broader focus on the entire spectrum of risks that confront a business which has begun to push the issue to the C-suite level. Unfortunately, while large businesses devote serious resources at the the highest level to ma