First they need to have a product or service that people will buy. They need revenues.
Second they need to have the ability to provide that product or service at a cost less than what their customers will pay. They needprofits.
Once they have revenues and profits, their business is a valuable asset. So third, they need to have a system to avoid losing that assetbecause of unforeseen adverse experience. They need risk management.
So Risk Management is the third most important need of a firm.
And there is often a conflict between risk management and the other two goals. Risk management will sometimes say that a business activitythat produces revenue is too risky and must be curtailed or modified insuch a way that it produces less revenues. Risk Management often costsmoney or otherwise depresses profits. For example, an insurance policycovering fire of a building owned by the firm will cost money anddepress profits.
So Risk Management needs to defend its value to the firm. Continued at Riskviews Blog
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