Types of Risk Management
There are three major areas or industries that risk management applies to:
Enterprise Risk Management
Enterprise Risk Management (ERM)sometimes referred to as operational risk management, affects virtually all public businesses today, both large and small. Enterprise risk management is a new way for businesses today to manage risk. In response to Sarbanes-Oxley and other regulatory legislation, enterprise risk management enables businesses to assess and analyze risk in an integrated fashion, identifying potential areas for risk in advance and then to proactively create processes and measures for compliance.
Credit Risk Management
Credit risk management affects banks, lending institutions and other businesses that loan out money. Such businesses are facing increasing credit risk in the form of payment defaults, settlement of transactions, and risk-adjusted rates of return on money. The major cause of credit risk stemms from lax credit standards from borrowers and from poor portfolio management.
Health Risk Management
Health risk management affects hospitals, medical clinics and other healthcare providers.
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