Risk Management and CSR

The risk is defined as the possibility that events will occur and affect the achievement of strategy and business objectives. To mitigate risk, companies have to develop risk management systems. Risk management systems fundamentally aim to address uncertainty in the marketplace. Their primary goal is to create controls and countermeasures that minimize or eliminate the disruption, loss, or damage to business operations and shorten the recovery time from an unwanted event, thereby reducing its impact on business. Specifically, risk management is the process of identifying, assessing, and controlling threats to an organization’s capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents, and natural disasters. Corporate social responsibility is related to corporate risk management through two means: by providing intelligence about what those risks are and by offering an effective means to respond to them. The key to both is more effectively “managing stakeholder relationship.”