Basic Principles of Risk
In this chapter we present some general principles for good risk management and dispel some common myths. The first, and in our opinion, most important principle of risk management is getting a proper understanding of what risk is and what risk management is. This, of course, has been covered in the previous chapter. The overarching principle of risk as the possibility of occurrence of good or bad things is key. Furthermore, understanding that risk managing is acting so as to increase the probability and magnitude of occurrence of good things while decreasing the probability and magnitude of occurrence of bad things is also essential. With that understanding in hand, the rest is relatively straightforward ...
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