Risk management is the ongoing process of identifying and evaluating both the chances of bad outcomes and the opportunities for good results, continually measuring exposures, taking preventive and hedging action, and eventually managing crisis should they arise. Risk monitoring is continuous. Risk management might include particular operational and financial activities or encompass them all. Its goal is to bring risks to the desired levels, compatible with the corporation’s growth and investment return goals, while taking advantage of upside opportunities. Risk management includes, most significantly, forex management, or currency risk exposure, where a currency overlay manager may efficiently protect companies from international transaction and translation losses and eventually gain from favorable exchange rate movements.
Lower risks mean higher valuations and longer enterprise life.