Risk management is a structured approach to managing uncertainty related to a threat, a sequence of human activities including: risk assessment, strategies development to manage it, and mitigation of risk using managerial resources.
(Pal, 2006, p. 374 )---------------------------------------
The Treasury Board of Canada Risk Management Policy states:
"Effective risk management ensures the continuity of government operations, and the maintenance of services to, and protection of the interests of, the Canadian public. Because all manner of risks are present throughout government operations, successful delivery of a program is contingent upon effective and cohesive management of those risks.
The importance of risk management has been growing steadily during the last several years. There is increasing awareness and expectation in Canada and abroad of the need to manage risks, rather than leaving them solely to insurance.
The risk environment has been evolving rapidly, as advancing technological and social developments bring forth new or hitherto dormant risks associated with such phenomena as hijacking, hazardous materials, pollution, electronic data, and exposure to legal and political liability. The government has an obligation to be fully aware of the state of the art in risk management, and to prevent losses and unnecessary expenditures.
Risk management can be extremely cost-effective when departments assess their risks properly and determine the most economical way to avoid them entirely, or reduce them to a minimum and limit potential expenditures arising from accidents or emergencies.
Risk management is a logical step-by-step process to protect, and consequently minimize risks to, the government's property, interests and employees. Risk includes the chance of damage to or loss of government property, and the chance of incurring second- or third-party liability to non-government entities. The saying "forewarned is forearmed" is an apt description of the management of risk."
A former senior Australian public servant, Malcolm Sparrow, notes in an interview in Canadian Government Executive, September 2007, that risk management for regulators requires a focus on both low-probability harms and well-established patterns of harm, such as those involving crime, pollution, and occupational hazards. Government has the added responsibility of regulating risks which are minimal to an individual, such as getting in a car accident, but on a whole are regular occurrences.
Robert Shepherd gives two additional definitions. Risk Management is defined broadly as "the process for dealing with uncertainty within a public policy environment." It is also "a systematic approach to setting the best course of action under uncertainty by identifying, understanding, acting on and communicating risk issues." (TBS, Risk Management Framework, 2001)
A risk control orientation demands substantial analytic sophistication and problem-solving methods, requiring attention to measurement and methodological rigor.
Treasury Board of Canada, 2008: Preface to the Risk Management Policy: http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=12253§ion=text#cha2
Pal, L. (2006). Beyond Policy Analysis: Public Issue Management in Turbulent Times. Third Edition. Toronto: Nelson – Thomson.