Risk Management in Finance

Financial risk management is the practice or method to protect economic amount during a firm by using financial instruments to manage exposure to risk: operational risk, credit risk and market risk, foreign exchange risk, shape risk, volatility risk, liquidity risk, inflation risk, business risk, legal risk, reputational risk.


Strategic risks

Strategic risks are risks that affect or are created by an organization's business strategy and strategic objectives. Strategic risks are those that arise from the fundamental decisions that directors take concerning an organization’s objectives. 

To know more on Strategic risks, refer to these links:

18 Strategy Risk Examples: 

To read about these 18 examples of strategy risk, Click here

How to Manage Strategic Risk for Organizational Success: 

To know how you can manage strategic risk in your organization,  Click here

Strategic and operational risks : 

Here are the impact of the strategic and operational risks in finance - Click here


Must Read: 7 skills needed to succeed


Five Steps of the Risk Management Process

  • Step 1: Identify the Risk. 

  • Step 2: Analyze the risk. 

  • Step 3: Evaluate or Rank the Risk. 

  • Step 4: Treat the Risk. 

  • Step 5: Monitor and Review the risk.



Why is risk management important in finance?

Risk management in finance is an important component for any business to become self-made. Financial risk management permits staff to guide an organization once troublesome things arise within the financial market. It helps enterprises produce ways to avoid losses and maximize profits the maximum amount as potential.

The 1st step is to work out precisely what the risks facing your business are, so as to assess the seemingly and potential impact of every incident occurring. Once this method has been completed, you'll get all the way down to evaluating the technique which can best fit your business and maximise your risk management moving forward.


Risk management techniques

Here are the basic strategies for risk management one can apply to all facets of an individual's life and can pay off in the long run.

  • Avoidance (eliminate, withdraw from or not become involved)

  • Reduction (optimize – mitigate)

  • Sharing (transfer – outsource or insure)

  • Retention (accept and budget)

OpenGrowth suggests you refer these blogs on risk management techniques:

The four techniques of risk management: 

Here are the four techniques that risk management entails - Click here

Risk Management Techniques: 

To know about the techniques of risk management, Click here

11 Effective Risk Management Techniques: 

Read about these risk management techniques that you can use during each stage of your risk management strategy - Click here


Also Read: Time management tips from sales leaders


We, at OpenGrowth, are continually looking for trending startups in the ecosystem. This was a blog on job skills for freshers. If you want to know any further information about the startup ecosystem or have any mind-boggling ideas, do refer to the other blogs at OpenGrowth. If you have any suggestions, do let us know in the comment section below. 

About the Author: Sudeshna Dutta

Sudeshna is an engineer in making. She is a writer at OpenGrowth. Apart from dealing with circuits and chips, she is passionate about being a keyboardist and pianist and wants to attain professionalism in it with her talent coupled with hard work.

The Editorial Team at OpenGrowth is working to provide you with the perfect place to know everything about startups.



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