Risk management involves identifying, assessing, and mitigating risk. The practice of identifying and analysing loss exposures and taking steps to minimize the financial impact of the risks they impose. An insurance company’s risk management approach is typically designed to prioritize the organization’s most significant risks, identify the potential impact of those risks and develop strategies to mitigate or eliminate them. One example of a popular insurance risk management technique is a reserve fund. A reserve fund is created by using a percentage of all the premiums being collected. The fund will be used to pay out claims on behalf of people who have been impacted by an event. Most entrepreneurs are risk takers, willing to invest resources with an expectation and hope, but no guarantee, of reward. But, from the viewpoint of insurance, “risk” is another word for “peril” and refers to things that can go wrong. Crime, vandalism, fire, a personal injury lawsuit, a computer virus, equipment breakdown, non-delivery of raw materials, death or illness of a key employee — the list of adverse events which can cause economic harm to your business or organization goes on.