What does risk management seek to minimize for individuals or businesses?

Risk management is a systematic approach aimed at identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events. In the context of individuals or businesses, the primary goal of risk management is to mitigate potential financial losses that can arise from various risks, such as natural disasters, legal liability, operational inefficiencies, or market fluctuations. By implementing effective risk management strategies, organizations can safeguard their assets, enhance their financial stability, and ensure their long-term viability.

In contrast, while reducing time spent on insurance paperwork, minimizing legal disputes with clients, and lowering insurance premiums can be beneficial goals, they are not the core focus of risk management itself. The primary concern is to address the financial implications of risks and protect against substantial economic impacts.