Which of the following best defines risk management?

Risk management is best defined as systematically identifying, evaluating, and mitigating risks because this definition encompasses the comprehensive approach needed to manage risks effectively within any organization. It emphasizes not only the identification of potential threats or hazards but also the evaluation of their impact and the implementation of strategies to minimize or eliminate those risks. This holistic process ensures that risks are managed proactively rather than reactively, allowing organizations to safeguard their operations and achieve their objectives.

The focus on systematic methodologies in risk management is crucial; it requires a structured approach to analyze risks in context, considering various factors that may contribute to potential hazards. This definition further implies an ongoing cycle of assessment and adjustment, which is necessary in a dynamic environment where new risks can emerge over time.

In contrast, assessing only physical risks is too narrow, as risk management should address all potential sources of risk, including financial, reputational, and operational risks. Minimizing costs associated with hazards, while important, does not fully capture the proactive and strategic nature of risk management, which goes beyond merely reducing expenses related to incidents. Lastly, implementing security measures for personnel, while a valid part of risk management, represents only a subset of the overall process and fails to encompass the broader scope of risk identification, evaluation, and mitigation strategies