Risk Assessment in practice

Value is a function of risk and return. Every decision either increases, preserves, or erodes value. Given that risk is integral to the pursuit of value, strategic-minded enterprises do not strive to eliminate risk or even to minimize it, a perspective that represents a critical change from the traditional view of risk as something to avoid. Rather, these enterprises seek to manage risk exposures across all parts of their organizations so that, at any given time, they incur just enough of the right kinds of riskno more, no lessto effectively pursue strategic goals. This is the sweet spot, or optimal risk-taking zone. Thats why risk assessment is important. Its the way in which enterprises get a handle on how significant each risk is to the achievement of their overall goals.